This legislation deals with important Massachusetts small business rating factors designed to create fair health insurance premiums by replacing some factors in the merged market risk pool for small businesses and their employees. The bill will help lower premium costs for small businesses in pooled markets through two incentives:

Allowing carriers to award participants who seek more efficient administration of coverage and influence member utilization through education and use of transparency tool
Authorizing insurers to offer year-end incentives for small employers and their employees based on the number of subscribers in the group

The group purchase of insurance and the proper use of healthcare allows for actuarial and administrative costs savings, something long done by the Group Insurance Commission. Small business group purchasing cooperatives, which were authorized by the Legislature in 2010, are uniquely situated to negotiate with carriers for the more efficient administration of coverage. This proposal would allow carriers to reward participants of a group purchasing cooperatives for undertaking such efforts and investing resources in this manner.