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Legislature Levies Medicaid Assessment Minus Reforms

Posted by Katie Holahan on Jul 26, 2017 4:53:35 PM

The Massachusetts Legislature today levied a $200 million tax on employers to cover a shortfall in the MassHealth program without making long-term structural changes needed to solve the problem.

StateHouse-resized-600.pngThe House of Representatives and Senate took the action despite pleas yesterday from the Baker Administration and the business community to consider the assessment and the long-term reforms as a package. AIM believes the financial problems at MassHealth, which provides health insurance to 1.9 million residents, will become more severe without significant reforms.

The assessment would increase the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan. The assessment would be partially offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

“The 4,000 employer members of Associated Industries of Massachusetts (AIM) are deeply disappointed that the Legislature has again decided to impose an assessment on employers without reforming the MassHealth program and reining in the crippling cost of health insurance,” said John Regan, Executive Vice President of Government Affairs at AIM.

“We note that the Legislature has pledged to pursue MassHealth reforms at a later date. We look forward to working with them on those reforms.”

The Legislature initially passed the reform-free assessment on July 7 as part of the budget for Fiscal Year 2018. Governor Charlie Baker returned that section of the budget to the Legislature 10 days later and asked lawmakers to pass the full package of reforms designed to place MassHealth on a firm financial footing.

The proposed reforms include:

  • Restructuring MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
  • Moving 140,000 people with incomes more than the federal poverty level out of MassHealth and into ConnectorCare;
  • Shifting 230,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into CarePlus, which does not;
  • Requiring the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered employer-sponsored insurance from seeking coverage through MassHealth.

It is uncertain whether the governor will sign the newest version of the assessment.

“Employers are thus left not only to struggle with the rising cost of providing health insurance to their own employees, but to bail out an unsustainable public insurance program as well,” Regan said.

Topics: Massachusetts Legislature, Health Insurance, Employer Health Assessment

AIM Calls for Long-Term Cost Changes to MassHealth

Posted by Rick Lord on Jul 25, 2017 2:19:20 PM

Editor's note - Associated Industries of Massachusetts President Richard C. Lord submitted the following testimony today to the Legislature's Joint Committee on Ways & Means and Joint Committee on Health Care Financing urging lawmakers to approve long-term structural changes to the state Medicaid program. AIM's Katie Holahan (above) delivered the same message in testimony before the committees.

On behalf of Associated Industries of Massachusetts (AIM) and its 4,000 employer-members statewide, thank you for your continued engagement with the employer community on the difficult issues before you today. We are pleased that both committees have so promptly scheduled this hearing and the second hearing scheduled for this afternoon. 

AIM supports the language contained in Governor Baker’s amendment to the Fiscal Year 2018 budget, returned to you within Attachment F.  The amendment contains a complex agreement that was developed after months of intensive negotiations between the Baker Administration and the business community. We believe the comprehensive plan moderates the proposed employer assessment by coupling it with meaningful structural reforms to the public health insurance system and rate relief within the Unemployment Insurance system.   

It is vital to maintain all aspects of this package so we will not find ourselves addressing an even larger MassHealth budget deficit in two years than the one we confront today. 

AIM likewise supports language authorizing the Baker Administration to seek a federal waiver allowing Massachusetts to return to policies implemented within the 2006 Health Care Reform law, and to expand the scope of practice for certain health-care providers to facilitate lower-cost care. 

The 2006 reform law made employees who were offered employer-sponsored health insurance ineligible for MassHealth.  The intent was to balance the requirement that employers do their “fair share” in offering health insurance with concerns about the financial burden on the MassHealth system.  The Affordable Care Act (ACA) reversed that policy and allowed income-eligible employees to decline employer coverage and seek insurance through MassHealth.  

The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden.  The ACA made public health insurance an economically rational choice for eligible residents in a state known for its expensive health-care system.   

As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years: the high cost of health-care coverage in this state threatens the underpinnings of our economy.  Policymakers who have concentrated almost exclusively on access and coverage now face a renewed imperative to lower the cost of health insurance for everyone in Massachusetts. 

AIM member employers are proud to lead the nation in providing health care coverage to their employees. Sixty-five percent of Bay State companies offer health insurance coverage to their workers, compared with 56 percent of employers nationwide. A full 100 percent of Massachusetts employers with 200 or more employees offer coverage.1 

The 4,000 member employers of AIM provide health insurance to the majority of residents in the commonwealth. 

But providing that coverage has financial consequences. 

According to the most recent data available from the Centers for Medicare and Medicaid Services (CMMS), Massachusetts was the second highest-spending state for health care in 2014, 30 percent more than the national average. Personal health-care spending in Massachusetts, per capita, has increased more than 12 percent in five years – from $9,417 in 2009 to $10,559 in 2014. Cost growth like this is unsustainable and has accelerated in the face of attempts by both employers and the commonwealth to contain it. 

Businesses, in fact, have almost nothing to show in the way of cost savings and efficiencies five years after Massachusetts’ major push toward health care cost containment. 

The commonwealth has exceeded the 3.6 percent health spending growth benchmark in two of the past three measurement periods. Total Health Care Expenditures (THCE) grew by 4.2 percent from 2013 to 2014, and by 4.1 percent from 2014 to 2015. 2 

These cost increases are occurring in an industry in which experts agree that at least a third of all care is unnecessary – delivered in the wrong setting; marked by a lack of coordination; provided with an inadequate emphasis on prevention; harmed by medical errors; burdened with rules and fraud; or just plain excessive.  

Now, the employer assessment means that business is expected to shoulder the escalating costs of the public healthcare system, as well.  More importantly, they are being asked to close the MassHealth deficit absent any of the  long-term structural reforms needed to solve the underlying financial problems with the program. 

Eleven years ago, employers joined with doctors, hospitals, patient advocates and lawmakers to forge a health-reform law that required all parties to share the responsibility for improving access to health care. The employer community calls for that same sense of shared responsibility now to solve the MassHealth shortfall. 

Thank you for considering AIM’s views and please feel free to contact me if you have any questions or need any further information.  

Topics: Massachusetts state budget, Controlling Health Care Costs, Employer Health Assessment

Governor Sends Back Employer Assessment; Seeks MassHealth Reforms

Posted by Katie Holahan on Jul 17, 2017 3:38:18 PM

Governor Charles D. Baker returned to the Legislature today the employer health-care assessment portion of the Fiscal Year 2018 budget, along with provisions changing Unemployment Insurance rates for 2018 and 2019, and urged legislators to include long-term reforms that will put the MassHealth program on a firm financial footing.

Health.Energy.jpgThe governor is also filing separate legislation making reforms to the commercial health-insurance market.

“The governor’s actions provide the Legislature with the opportunity to review and vet the reforms, and to pass a thoughtful, comprehensive package that balances investments made by all stakeholders in the Massachusetts healthcare system,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

The employer assessment would raise $200 million annually through the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan. The assessment would be offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

The administration hammered out the MassHealth reforms during months of negotiations with AIM and other members of the business community. The proposed reforms include:

  • Restructuring MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
  • Moving 140,000 people with income above 100% of the federal poverty level out of MassHealth and into ConnectorCare;
  • Shifting 230,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into CarePlus, which does not;
  • Requiring the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered employer-sponsored insurance from seeking coverage through MassHealth.

The Baker Administration’s decision to file stand-alone legislation addressing commercial health insurance reforms acknowledges the need for comprehensive reform of our private healthcare systems. As employers are faced with the second most expensive health-care costs in the nation, the need for reform and cost containment is vital to maintain both the quality of care and the level of coverage across our commonwealth.

AIM looks forward to the Legislature’s consideration of these challenging topics and their willingness to engage with a broad coalition of partners across our health-care system to attain an equitable resolution.

Topics: Massachusetts state budget, Controlling Health Care Costs, Employer Health Assessment

Boston Lawmaker Named Chair of Ways & Means Committee

Posted by Christopher Geehern on Jul 13, 2017 2:18:38 PM

House Speaker Robert DeLeo on Sunday named a Boston legislator with extensive experience in health-care policy to chair the Ways and Means committee that crafts the state budget.

Rep. Jeffrey Sanchez of Jaimaica Plain will take over from Representative Brian Dempsey, D-Haverhill, who announced last week that he will resign from the Legislature to take a job at lobbying firm ML Strategies.

Sanchez.jpg"Representative Sanchez is an exceptionally thoughtful legislator who has worked with Associated Industries of Massachusetts on some of the most complex issues facing the business community, especially managing the cost of health care," said John Regan, Executive Vice President of Government Affairs at AIM.

"We look forward to working with him in his new role as chair of the Ways & Means Committee."

Sanchez currently chairs the Health Care Financing Committee and previously co-chaired the Legislature's Joint Committee on Public Health. He has been active on economic justice issues and legislation aimed at addressing racial and ethnic health disparities, and recently co-chaired a special commission that examined price disparities in the health care sector.

His nomination will come before a Democratic caucus today.

Hinting at the potential for challenging health care policy changes at the federal level, DeLeo told State House News Service that the work Sanchez has done as committee chairman "will be crucial as we address the health care challenges inherent to the budget and grapple with uncertainty on the national level." 

Dempsey had served in the Legislature since 1991 and has overseen the past six state budgets. He will become senior vice president and chief operating officer of ML Strategies, an AIM member, in September.

“AIM congratulates Chairman Dempsey and looks forward to working with him in his new role at ML Strategies,” Regan said.

“Mr. Dempsey has always been willing to consider the opinions of the business community and has been a thoughtful voice of moderation in guiding the fiscal course of the commonwealth.”

Dempsey said in a statement: "It has been an incredible honor to serve the people of Haverhill in an elected capacity since 1988. I am proud of all that we have been able to accomplish together. I would like to thank all of my supporters, friends and family for their encouragement and help through the years.

"While I am moving on to a new chapter in my life, Haverhill will always be my home, and we will continue to keep the city moving in the right direction."

Topics: Massachusetts Legislature, Massachusetts House of Representatives

AIM to Governor: Send Employer Health Assessment Back to Legislature

Posted by Rick Lord on Jul 12, 2017 3:11:18 PM

Editor's note - AIM delivered the following letter from CEO Richard C. Lord to Governor Charles D. Baker this afternoon.

Dear Governor Baker:

On behalf of the 4,000 employers of Associated Industries of Massachusetts (AIM), we strongly urge you to send back to the Legislature the employer health-care assessment provisions contained in the Fiscal Year 2018 (FY18) budget, along with a recommended amendment that includes the reforms agreed to by AIM, your administration and other interested parties.

The FY18 budget now on your desk would require employers to cover the $200 million financial shortfall in the MassHealth program while omitting the long-term structural reforms essential to addressing health-care cost imbalances in both the commercial and public insurance markets.

The result is that employers – who already struggle with the rising cost of providing health insurance to their employees – will also be forced to assume the responsibility for funding an unsustainable MassHealth program.

The assessment comes at a time when Massachusetts employers have almost nothing to show in the way of cost savings and efficiencies four years after the state’s cost-containment law took effect.  In the three years that the state has been measuring the year-over-year growth in health care expenditures, we have exceeded the cost control benchmark twice.

Massachusetts employers are proud to lead the nation in providing health care coverage to employees. Sixty-five percent of Bay State companies offer health insurance coverage compared with 56 percent of employers nationwide. A full 100 percent of Massachusetts employers with 200 or more employees offer coverage.

In 2006, employers joined with doctors, hospitals, patient advocates, and lawmakers to forge a health-reform law that required everyone to share the responsibility for improving access to health care.  We ask you to insist that same sense of shared responsibility be applied now to solve the MassHealth shortfall by returning the employer-assessment provisions to the General Court and insisting that the comprehensive compromise forged by the business community and your administration be included in the final budget. 

Thank you for considering AIM’s position.  Should you have any questions please feel free to contact me directly at 617-262-1180.

Sincerely,

 Lord_Richard C.jpg

Richard C. Lord, President & CEO
Associated Industries of Massachusetts

Topics: Budget, Employer Health Assessment, health insur

Beacon Hill Passes Health Assessment Without Reforms

Posted by Katie Holahan on Jul 7, 2017 12:10:00 PM

The Massachusetts Legislature today passed a Fiscal Year 2018 budget that requires employers to cover a financial shortfall in the MassHealth program, but does not make the long-term structural changes needed to solve the problem.

statehousedome1.jpg“The 4,000 employer members of Associated Industries of Massachusetts (AIM) are deeply disappointed that Massachusetts has refused to take the courageous steps necessary to reform the MassHealth program and to rein in the crippling cost of health insurance,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

“The proposed state budget would force employers already struggling with the rising cost of providing health insurance to their employees to also pick up the tab for bailing out the unsustainable MassHealth program.”

The budget turns away from key elements of a compromise forged by the business community and the Baker Administration that balanced restructuring of MassHealth and the private insurance market with a temporary, $200 million assessment on employers. The compromise was designed to address the structural cost imbalances in MassHealth and place the program on a sound financial footing.

The business community has instead been left with a reform-free plan that will create a new tax on employers without making any hard decisions on containing costs.

The assessment would increase the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan. The assessment would be partially offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

“On its own, the employer assessment negatively impacts thousands of businesses around the state.  That impact is only acceptable as one part of a broader package that begins to address underlying health care costs,” AIM and a coalition of employer groups said in a statement.

“Eleven years ago, employers joined with doctors, hospitals, patient advocates and lawmakers to forge a health-reform law that required all parties to share the responsibility for improving access to health care. The employer community calls for that same sense of shared responsibility now to solve the MassHealth shortfall,” Lord said.

Business Groups | Lack of Reform Unacceptable

Topics: Budget, Employer Health Assessment

Employer Confidence Strengthens Again

Posted by Christopher Geehern on Jul 5, 2017 10:08:03 AM

Massachusetts employer confidence rose for the ninth time in 10 months during June amid optimism about an economy that is finally attracting more people into the work force.

BCI.June.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose one point to 61.8 last month, leaving it 5.7 points higher than a year ago. The Index has gained ground in each of the past two months after slipping in April.

The results come a month after state officials reported a long-awaited expansion of the Massachusetts labor market – the labor-force participation rate rose to 66.7 percent in May, its highest mark since before the Great Recession.

“Employer confidence in both the state and national economies remains well above the level we saw a year ago, especially among manufacturers,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Key Massachusetts indicators such as total jobs, wages and gross state product far exceed pre-recession levels and that is outweighing concerns about long-term growth.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The index has remained above 50 since October 2013.

The constituent indicators that make up the overall Business Confidence Index were mostly positive during June.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 2.1 points to 64.2, leaving it 5.7 points higher than in June 2016.

The U.S. Index of national business conditions rose 2.8 points to 57.4 despite lingering uncertainty about federal economic policy. June marked the 87th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, rose 1.5 points to 61.9 while the Future Index, measuring expectations for six months out, increased 0.4 points to 61.7. The Future Index was 5.1 points higher than a year ago.

The Company Index, reflecting overall business conditions, was unchanged for the month at 62.4 and up 4.7 points during the 12-month period. The Employment Index fell 0.4 points to 58.1 while the Sales index rose 0.6 points to 62.6.
The AIM survey found that 39 percent of respondents reported adding staff during the past six months while 18 percent reduced employment. Expectations for the next six months are stable – 38 percent hiring and only 10 percent downsizing.

Alan Clayton-Matthews, a professor in the School of Public Policy and Urban Affairs at Northeastern University, said the supply of workers remains one of the most important factors in the ability of Massachusetts to maintain long-term economic growth.

“There is little slack left in the labor market. Unemployment rates are back to pre-recession levels, and employment rates are very close to pre-recession levels. The slack that does remain is largely among young workers, those with less than a high-school education, and part-time workers who have been unable to find full-time work, suggesting that many workers lack the skills that employers are seeking,” Clayton-Matthews said.

Overall participation in the labor force nationally has hovered below 63 percent during the recovery, compared with more than 66 percent before the recession.
Eastern Massachusetts companies were more confident in June than those in the western portion of the commonwealth. Eastern Massachusetts employers posted a 61.8 confidence reading in June versus 60.8 for employers in the west.

AIM President and CEO Richard C. Lord, also a BEA member, said employers are increasingly concerned about a passel of potentially expensive and disruptive Beacon Hill proposals, including a surtax on incomes more than $1 million, paid family leave and an employer assessment to close a budget gap in the MassHealth program.

“Massachusetts employers have led what is now one of the longest and most consistent economic recoveries of the past 100 years. Much of that growth reflects the fact that policymakers have refrained from unnecessarily raising business costs and imposing inefficient regulation,” Lord said.

“We look forward to working with the Legislature and the Baker administration to ensure that those policies continue.”

Topics: Employers, AIM Business Confidence Index, Massachusetts economy

Infographic: Paid Leave Law Raises Benefit Costs by 87 Percent in California

Posted by Brad MacDougall on Jun 26, 2017 8:30:00 AM

The Massachusetts Legislature is considering a paid leave bill that would establish the right of employees to receive job-protected paid family and paid medical leave.  Benefits would include up to 16 weeks of paid family leave, and 26 weeks of paid medical leave.  Weekly benefits would begin at 50 percent of the employee’s weekly wage and capped at $1,000 per week.

But benefit costs would accelerate quickly if the bill becomes law. The 50 percent salary replacement level required at implementation in January 2019 would increase to 90 percent by January of 2021.

How fast will costs increase? Consider the following information about California's decade-old paid family leave law:

Paid Leave.jpg

 State of California
Labor and Workforce Development Agency

Register for the Paid Leave Webinar

 

Topics: Employment Law, Paid Family Leave

Governor, Business Community Reach Compromise on Health Assessment

Posted by Katie Holahan on Jun 20, 2017 2:00:00 PM

The Massachusetts business community has agreed to support a broad compromise plan to stabilize the Massachusetts Medicaid and Unemployment Insurance systems while offseting a two-year employer health-care assessment with savings elsewhere.

Baker.2017.jpgThe complex agreement, developed after months of intensive negotiations between the Baker Administration and the business community, would make structural changes to the MassHealth program to reduce ongoing financial shortfalls in the state/federal insurance program for low-income people. There would also be cost-saving changes to the commercial health-insurance markets, including increased incentives for patients to seek care at high-quality community hospitals.

The plan would use a temporary employer health assessment as “bridge financing” to capitalize the MassHealth program until the long-term reforms are implemented. The assessment would raise $200 million annually through the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan.

The assessment would be offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

The administration announced the agreement today in a letter to the chairs of the Legislature’s Joint Committee on Ways and Means.

“The comprehensive plan moderates the employer assessment that was originally proposed in January while offering the opportunity for meaningful structural reforms to the health insurance system and rate relief within the Unemployment Insurance system,” said Richard C. Lord, President and Chief Executive Officer of AIM.

The compromise will require approvals both from the Massachusetts Legislature and from federal officials.

Here are the key elements of the agreement:

MassHealth/Medicaid

  • Moves 140,000 people who are above the federal poverty level out of Masshealth and into the Connector market;
  • Restructures MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
  • Shifts 30,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into Careplus, which does not;
  • Adds co-pays for MassHealth members;
  • Requires the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered affordable health insurance by an employer from seeking coverage through MassHealth.

Commercial Market Reforms

  • Imposes a five-year moratorium on insurance mandates (requires change to state law);
  • Increases the required premium differential for tiered network plans from the current 14 percent to 28 percent. (requires state law change);
  • Promotes transparency tools for employers and consumers. (requires state law change);
  • Increases access to lower-cost providers by expanding the scope of practice for optometrists, podiatrists and advanced practice registered nurses (APRN) and creating a new mid-level provider - dental therapists. (requires state law change).

Employer Assessment:

  • Applies to employers with six or more employees (both full and part-time);
  • Increases the EMAC contribution rate for all employees, statewide. Additional annual two-tiered assessment on any employees receiving health insurance through public programs.
  • Tier 1 is broad based, raising the current EMAC rate from 0.34 percent to 0.51 percent of annual wages, up to the annual wage cap of $15,000. Applies to all employers currently subject to EMAC; raises the maximum per-employee contribution rate from $51 to $77; state expects to annually collect $75M under this tier;
  • Tier 2 introduces a targeted payment that would require employers to pay an additional 5 percent of annual wages for each non-disabled employee on public coverage, up to the annual wage cap of $15,000; applies to all employers currently subject to EMAC with non-disabled employees on MassHealth (not in premium assistance) or subsidized Connector coverage (ConnectorCare); Tier 2 would result in an annual maximum per employee contribution rate of $750; state expect to collect an estimated $125M in Fiscal Year 2018 under this tier; the estimate is dependent upon the actual number of individuals on public coverage.
  • Waiver applies for anyone receiving insurance through parent, spouse or other household member;
  • Implementation date of January 1, 2018 and a sunset date two years later.

Unemployment Insurance

  • An automatic increase of three levels to schedule F due to take effect on January 1 would be replaced with a one-level jump to schedule D for 2018 and another single increase to schedule E for 2019.

Governor Baker in January proposed to close a $600 million shortfall in MassHealth by levying a $2,000-per-employee fee upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, or do not make a minimum contribution of $4,950 annual contribution for each full-time worker. AIM opposed that plan because it would penalize the majority of companies that provide good health insurance to their workers.

Topics: Controlling Health Care Costs, Charlie Baker, Employer Health Assessment

A Better Idea to Reduce Carbon Emissions...

Posted by Bob Rio on Jun 19, 2017 8:30:00 AM

Massachusetts could reduce carbon emissions far more significantly by streamlining existing greenhouse-gas reduction initiatives than by implementing a bureaucratic new carbon tax.

trafficsmall.jpgThat’s why Associated Industries of Massachusetts will oppose a carbon-tax bill and offer an alternative strategy during a Beacon Hill hearing tomorrow.

An Act Combating Climate Change would establish in its first year a carbon tax of 10 dollars per ton of carbon dioxide emitted, rising steadily to 40 dollars per ton in year seven on all fossil-fuel use (gas, diesel, natural gas) in transportation (on and off road vehicles, trucks, recreational and commercial vehicles, including buses, trains and vans) and residential and business heating and process.

Fuels used to generate electricity would be exempt because there is already a carbon tax on those sources.  

The money generated – almost $600 million dollars the first year and rising to $2.4 billion in year seven - would be returned as rebates to residents and business by a mechanism to be developed by the state Department of Energy Resources (DOER). Rebates would be made in rough proportion to what each sector pays. Based on current usage, approximately 60 percent of the funds would come from the transportation sector.

AIM opposes the carbon-tax bill because the rebate mechanisms is expensive and overly bureaucratic. Collecting and rebating money to nearly 7 million residents and 250,000 or more businesses will be an enormous administrative burden that will cut into the rebates.

AIM estimates that the average payer will get back through rebates only 50-60 percent of the amount paid into the tax. Certain groups could get more than they paid.    

Rather than establish an entirely new program, AIM suggests fixing the current programs; and if a carbon tax is desired, replace the current funding for the existing programs with the proceeds of a carbon tax.

Massachusetts already surcharges both residential and business electricity and natural gas users to support programs that reduce greenhouse-gas emissions. Those surcharges generate almost $2 billion dollars per year.

These programs could be more efficiently managed through the one source of revenue envisioned in this legislation.

Our recommendations include:

  • All carbon emissions, including the electricity sector, should be subject to the carbon tax.
  • The carbon tax should replace the carbon tax instituted under the state’s participation in the Regional Greenhouse Gas Initiative (RGGI).
  • All current programs that deal with energy efficiency and renewable energy that are funded by ratepayers or taxpayers should be eliminated, including those currently directed at the transportation sector.

With all programs eliminated, the single funding source would be overseen by a new advisory council – the Carbon Reduction Advisory Council - made up of a diverse group of stakeholders. Under the direction of this advisory council, the funds would be channeled to programs that would compete to provide the best carbon-reduction strategies.

This would be a bold change to the way Massachusetts operates these programs. But a bold change is needed. Many of the existing programs have become hidebound and uncoordinated. New ideas that could help our collective carbon-reduction goals are not instituted because they do not fit into current silos.

This new thinking is not only better but necessary to attain the commonwealth’s greenhouse gas reduction commitments.

Please contact me at 617.262.1180 or a rrio@aimnet.org if you would like more information or updates on the carbon tax.

Q & A on the Carbon Tax

Topics: Regulation, Environment, Carbon Tax

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