A coalition of Michigan business groups is urging state senators to reject legislation that they claim will drive up the cost of health coverage for small employers.
At issue are two bills the state House passed this week by wide margins — House Bills 4346 and 4354 — that would require health insurers to cover oral oncology drugs at the same rate as intravenous chemotherapy, which costs much more. The legislation would also cap consumer co-pays at $50 for a 30-day supply of insulin.
The Michigan Affordable Healthcare Coalition argues that neither mandate actually reduces costs or prices — just what consumers pay out of pocket. If enacted, the bills would drive up health premiums for fully insured small businesses, the coalition argues.
“These bills really don’t do anything to cut costs. They just simply shift costs,” Wendy Block, vice president of business advocacy and member engagement at the Michigan Chamber of Commerce, said today during a media briefing.
“However well intentioned, the bills amount to government price controls and unwanted governmental interference in contracts,” Block said. “They try to cap out-of-pocket costs for consumers, but really what that means is those costs get shifted around elsewhere, and it gets shifted to health insurers, which ultimately gets pushed down in the form of higher premiums to employers.”
And higher premiums could lead employers to impose higher co-pays and premiums sharing onto employees, she said.
The mandates would only apply to health coverage for small employers that fall under state regulations. Large group coverage that’s typically self-funded by employers are regulated at the federal level.
Citing data from bill advocates, the business coalition says the two mandates will add $57.2 million to the cost of coverage for small employers and could potentially lead some to drop benefits.
Scott Lyon, senior vice president of the Small Business Association of Michigan, said the bills and potential for shifting higher costs come at “a really bad time” for small employers working to recover from the economic effects of the COVID-19 pandemic.
Less than 30 percent of small businesses in Michigan with 50 or fewer employees offer employee health benefits, Lyon said. He worries that adding more mandates to coverage that adds costs will drive that rate lower.
“These costs will show up in the premiums that the small business owners pay, and it’s a little bit like the straw that broke the camel’s back” he said. “We recognize that there is an unaffordability issue here with the cost of some of these high-price prescription drugs. We all want to work on positive solutions. Unfortunately, these two solutions in front of us today cause more harm than good.”
The two bills are part of a broader package of legislation that lawmakers are reviewing in Lansing that seeks to control rising health care costs.
Each passed the House on Wednesday in separate 91-16 votes and now head to the Senate for consideration.
In testifying to the House Health Policy Committee last month on the bill to cap insulin copays, Gary Dougherty of the American Diabetes Association told lawmakers that the price of insulin tripled from 2002 to 2013, and since then has doubled. That’s resulted in far higher out-of-pocket costs for diabetes patients, said Dougherty, the organization’s director of state government affairs.
“By ensuring that insulin is affordable, people with diabetes are then in a position to stay healthy and productive. Proper management of their diabetes in turn reduces costly complications,” he said. “The Association estimated that the cost of diabetes in Michigan in 2017 was more than $12 billion. By keeping insulin affordable, we can help keep people with diabetes out of the ER and the hospital, and away from expensive and potentially disabling or deadly complications.”
While members of the Michigan Affordable Healthcare Coalition share that concern and the need to make prescription drugs more affordable for employers and consumers, they argue that coverage mandates are not the way to achieve that goal.
“The bills don’t address what these services or these drugs cost,” said Bret Jackson, president of the business-labor coalition Economic Alliance for Michigan. “We have to address the total cost of health care, not just the out-of-pocket costs for employees, if we really want to make a dent for small businesses and individuals in this state.”
The Michigan Affordable Healthcare Coalition consists of the Economic Alliance, the Michigan Chamber, the Grand Rapids Area Chamber of Commerce, Michigan Association of Health Plans, Small Business Association of Michigan, Detroit Regional Chamber and National Federation of Independent Businesses.