Trans Pacific Partnership - No Song and Dance

Posted by Kristen Rupert on Oct 8, 2015 10:38:35 AM

The announcement earlier this week that the United States and 11 Pacific Rim countries approved a historic trade pact is big news.

containershipdock.smallThe Trans Pacific Partnership (TPP), promises to lower or eliminate tariffs on thousands of products and services that are currently traded among participating countries.  Among the major U.S. industry sectors affected are pharmaceuticals, seafood, dairy and auto parts.

But many months of politicking, discussions, debate and scrutiny lie ahead before Congress even votes on the TPP.

The TPP has been negotiated over the past decade in dozens of sessions around the Pacific.  The most critical and far-reaching components include tariff reductions, uniform intellectual property rules, further opening of the Internet, fair labor standards, dispute-settlement practices, and environmental protection.  These proposed changes should ease trade barriers and lower costs for U.S. exporters.

On the flip side, many politicians and industry leaders are concerned about the impact of TPP on labor, jobs, access to inexpensive medicine, and more.

The full transcript of the TPP, including 30 chapters and thousands of pages, has not yet been made available to the public or to Congress.  And the details of TPP will be critically important.  Release of the full text this fall will signal the start of a thorough review of TPP by industry experts and politicians during the next five to six months.  Revisions are likely.

TPP will eventually be brought to a vote in Congress by spring of 2016 at the earliest.  Because Trade Promotion Authority legislation (TPA), also called “Fast Track,” was approved by Congress this past summer, the TPP vote will be a simple Yes or No, with no amendments permitted. 

Why is TPP an important issue in Massachusetts? Three of our top five export markets—Canada, Mexico and Japan—are TPP participants.  And Singapore, Australia and Malaysia, also TPP participants, are on the top 25 export destination list.  Easing barriers and reducing costs for trade with these key markets will benefit Massachusetts companies.  Expect to hear from the Bay State’s industry leaders in pharma, seafood, agricultural products, services and footwear about how they will be affected by TPP.

And the state’s U.S. Congressional Delegation will certainly weigh in on the massive trade pact.

Employers will be able to learn more about TPP at the Massachusetts Export Center’s Export Expo on December 11, when several U.S. government trade experts from Washington DC will be in Boston to share their insights with the international community.  AIM is co-sponsoring the Export Expo.

As proof that TPP is top-of-mind this week, and not just “inside the Beltway,” check out this brief video clip from last Sunday’s popular TV series “Madame Secretary,” which features a musical skit at a hypothetical state dinner in Washington DC for representatives of all twelve TPP countries:


Topics: International Trade

AIM-Member Employers Join Governor's Economic Panel

Posted by John Regan on Oct 7, 2015 2:27:46 PM

The chairman of the Associated Industries of Massachusetts Board of Directors yesterday joined more than a dozen other AIM members as part of a council that will help the Baker administration develop a long-term economic plan for the commonwealth.

Kenary2-15Daniel Kenary, chief executive officer and co-founder of the Harpoon Brewery who took over as chair of AIM in May, will formally represent the association on the governor’s Economic Development Planning Council. The council, chaired by Secretary of Housing and Economic Development Jay Ash, must submit its economic plan to the Legislature by the end of the year.

“The Planning Council offers an opportunity for engagement with business, public, and non-profit sector leaders on a wide range of economic development priorities and programs,” said Governor Charlie Baker. “Their invaluable experience will help guide our planning and implementation, and I look forward to continued partnerships as we work to develop Massachusetts’ economy, and ensure that communities across the commonwealth share in our economic growth.”

The council is expected to address many of the same business-development challenges that AIM included in its centennial Blueprint for the Next Century plan. Issues such as regulatory reform, workforce development, business costs and innovation are expected to dominate the agenda.

Kenary will be joined on the council by three fellow AIM directors - Andrew P. Botti, Esq., Director, McLane Middleton Law Firm; Jeevan Ramapriya, Vice President, State Street Bank and Trust Co.; and Ralph Smith, Chief Executive Officer, President and Director, Kayem Foods Inc.

Other members named to the council include:

  • Arthur Barrett, President, Barrett Distribution Centers
  • Delcie D. Bean IV, CEO, Paragus Strategic IT
  • Tom Chmura, Vice President for Economic Development, University of Massachusetts
  • Donna Cupelo, Regional President, Verizon New England
  • Jack Healy, President and CEO, Massachusetts Manufacturing Extension Partnership
  • Salvatore Lupoli, President and CEO, Lupoli Companies
  • Chris Oddleifson, President and CEO, Rockland Trust
  • Peter Stasiowski, Director of Communications and Human Resources, Interprint Inc.
  • Susan Mailman, President, Coghlin Electrical Contractors, Inc.
  • Robert F. Rivers, President and COO, Eastern Bank
  • Karen Kaplan, Chairman/CEO, Hill Holiday
  • Wayne Canty, CEO/ Owner, Heat Trace Products, LLC

Public-sector participants include the co-chairs of the Legislature’s Joint Committee on Economic Development and Emerging Technology, Senator Eileen Donoghue and Representative Joseph Wagner. Administration and Finance Secretary Kristen Lepore, Labor and Workforce Development Secretary Ron Walker, Energy and Environmental Affairs Secretary Matthew Beaton, and Transportation Secretary Stephanie Pollack are also part of the panel.

“AIM is an association of employers so we are delighted that Dan Kenary and other talented employers are part of the Economic Development Planning Council. No one can help the Baker administration better understand the challenges of job creation than the people actually creating jobs here in Massachusetts,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Massachusetts law requires the appointment of an economic development planning council, and the filing of an economic development plan, within the first year of each new gubernatorial administration. The Council will convene again for the second and final time on December 9 to offer its final recommendations

Topics: Associated Industries of Massachusetts, Charlie Baker

Employers Remain Confident, But Wary

Posted by Andre Mayer on Oct 6, 2015 9:39:32 AM

There is no Alan Greenspan-style “irrational exuberance” among Massachusetts employers these days.

BCI.September.2015The people who run businesses throughout the commonwealth remain confident about the overall state of the economy, but a global growth slowdown and domestic political uncertainty are leaving them more circumspect than in the spring.

The Associated Industries of Massachusetts Business Confidence Index shed 1.2 points in September to 55.9, leaving it a point and a half above its reading of last September (54.4). The average confidence reading during the third quarter of 2015 was 57.4, barely below the second quarter (57.6) and higher than the fourth (56.3) and third (54.9) quarters of 2014.

“Although this is the Index’s fifth decline in six months, the trend is more sideways than downward,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“While the economy has been chugging along at present, business confidence appears to have suffered as a result of concerns about future uncertainties…Internationally, the slowdown in China sidelines one of the principal engines of global growth, while our other major export markets – Western Europe, Canada, Japan – are all weak.”

Release of the Business Confidence Index comes five days after the government announced dismal employment numbers for September and two weeks after the Federal Reserve decided that the economy remains too fragile to raise interest rates from their near-zero level.

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. 

The sub-indices based on selected questions or respondent characteristics were mostly down from August to September, but mostly up compared to September 2014. The U.S. Index assessing national business conditions edged off a tenth to 50.6, while Massachusetts Index of conditions within the Commonwealth lost two points to 54.7.

“The commonwealth’s economy is currently performing very well, with strong job creation and solid GDP growth,” said BEA member Michael D. Goodman, Executive Director of the Public Policy Center at UMass Dartmouth. “Despite some significant sectoral and regional imbalances, Massachusetts has consistently outpaced the national economy throughout the recovery and expansion periods, and the state’s industry mix is helping to buffer it from the full impact of a slowing global economy.”  

The Company Index, which assesses the overall situations of their operations, was off 1.3 points at 58.1; the Sales Index lost 2.9 to 57.7; and the Employment Index was down half a point at 54.7.

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Top Signs that Your Compensation Plan is Broken

Posted by Russ Sullivan on Oct 5, 2015 1:34:42 PM

The first inkling that your company’s compensation system is out of balance often comes when a key performer suddenly leaves to take more money somewhere else.

FourpeopleI have heard the same story many times in the years I have taught compensation management to experienced HR people as part of AIM’s HR Leve Two certificate series – a valuable performer is recruited to another employer, perhaps even a competitor, because the compensation program at your company has drifted away from the market.

What are the top signs that your pay and benefits are out of balance?

  • The company has no job descriptions or poorly written job descriptions.  Not knowing what the job is makes it impossible to know what to pay the job.
  • Title creep.  Companies often award titles, rather than compensation, so there is a disconnect when the employee compares her or his pay to others with the same title outside the company.
  • Lack of salary ranges. There is no understanding of the minimum or maximum value of a particular job.
  • When they do have salary ranges, companies often forego increasing those ranges when they have had a difficult year financially.  The market still moves ahead and so they find themselves out of sync with the market.
  • Lack of consistency among departments in the way in which employees are compensated.  One department is conservative when it comes to pay while another department looks for every opportunity to give money.
  • Across-the-board increases.  The company compensates high performers and low performers with the same percent of increase, leading to a culture of mediocrity.  High performers start to wonder why they put in superior effort when they receive the same increase as an employee who puts in half effort.
  • Failure to periodically check the internal equity of the pay structure.  Companies sometimes make the mistake of hiring people at or above the salaries of workers doing the same job and who have more experience.  This drives turnover.  It is a little like the bank that gives special rewards and rates to new customers, but existing customers are not eligible.
  • Lack of a well-defined pay philosophy.  How does the company want to pay in comparison to the general market?  Does the company want to be a market leader, pay the same as market or be a market laggard?  Having a plan and managing to the plan makes a company more likely to be in control of their compensation system.
  • Trying to manage compensation with people who don’t have expertise in compensation.  You would not go to a general practitioner if you needed back surgery.  Getting the right help is critical.

Register for HR Level Two Certificate Series

Topics: Compensation, Management, Human Resources

Health Reform Change will Help Massachusetts Employers

Posted by Katie Holahan on Oct 2, 2015 1:21:00 PM

A rare show of bipartisanship in Congress appears likely to give Massachusetts the ability to sidestep a provision of federal health reform that threatened to boost premiums for companies with 51-100 employees.

USCapitol1The House of Representatives and Senate this week passed by voice votes a bill that would amend a provision of Obamacare forcing those employers into the merged health-insurance market for small companies and individuals. The shift would have raised rates for many employers with payrolls of 51 to 100 because they would subject to more stringent actuarial value, cost sharing and essential health benefit requirements, as well as state rating rules that have not applied to them.

Instead, the Protecting Affordable Coverage for Employees (PACE) Act will continue to classify 51-100 employee companies as large employers unless states decide to treat them differently.

The White House indicates that President Barack Obama plans to sign the bill.

“The opportunity for Massachusetts to maintain the current health-insurance rating system for employers with 51 to 100 workers is great news for the state economy at a time when health costs appear to be accelerating,” said Richard C. Lord, President and Chief Executive Office of Associated Industries of Massachusetts.

“The PACE Act promises to provide predictability and benefit-plan flexibility for employers moving forward.”

AIM has been pressing for more than a year for regulatory or legislative relief from the expansion of the small-group market. The federal government in August approved a transition period allowing the 51-100 companies to buy insurance under current rating system until October 1, 2016, instead of the January 1, 2016 date established by the Affordable Care Act.

The cost of health insurance is already showing signs of accelerating for small employers after several years of moderate increases. The Massachusetts Division of Insurance has approved premium increases averaging 6.3 percent for the first quarter of 2016 for companies with 1 to 50 employees. That’s more than double the 3.1 percent average increase that small business saw in the first quarter of this year.

PACE "is a smart health care bill aimed at protecting workers’ benefits, lowering premiums and reducing costs to taxpayers,” Senate Majority Leader Mitch McConnell, R-Ky., said after clearing the bill.

Jeanne Shaheen of New Hampshire, the Senate bill’s lead Democratic sponsor, also applauded the move in a statement. “While the Affordable Care Act continues to divide Congress, today we’ve made real progress towards improving this law,” she said.

AIM continues to lobby for the same sort of state flexibility on a separate provision of federal health reform affecting rates for smaller employers. Massachusetts has for many years used 11 rating factors in its merged individual and small-business health insurance market, but federal health reform is phasing that number down to four, a change that is adding significant turbulence to the small-group health market.

Topics: Health Care Reform, Health Care Costs, U.S. Congress

Infographic: The Cost of Electricity in Massachusetts

Posted by Robert Rio on Sep 29, 2015 12:39:33 PM


"Today, Massachusetts has taken a giant step forward toward a clean energy future. This legislation will reduce electric bills, promote the development of renewable energy, and stimulate the clean energy industry that is taking root here in the Commonwealth…" , Governor Deval Patrick as he signed the Green Communities Act in 2008.

Boston Herald in 2011 reveals a staggering $4 billion dollars in extra cost to Massachusetts ratepayers by the Green Communities Act.  Boston Herald November 10, 2011, "Martha Coakley: ‘Green’ act costs $4B."

Remember the Ratepayer

Posted by John Regan on Sep 28, 2015 10:20:45 AM

A manufacturing company in Berkshire County pays an average of 12.87 cents per kilowatt hour for electricity.

ElectriclinessmallMove that company several miles to the west, over the New York border, and the cost drops by more than half, to 6.15 cents per kilowatt hour.

Remember those numbers when someone tells you that electricity costs don’t affect where companies locate and create jobs. The difference can add up to millions of dollars per year and hundreds of jobs.

The corrosive impact of high electricity costs on the state economy will be front and center tomorrow as Associated Industries of Massachusetts testifies on multiple bills pertaining to solar power and hydro power. The hearing underscores the responsibility of policymakers to refocus Massachusetts energy policy around the one figure largely forgotten in the often esoteric political debates over power – the ratepayer.

It’s the same ratepayer who foots among the highest electricity bills in the country. The same customer whose rates have surged 56 percent during the past decade versus 38 percent for the nation as a whole. The same employer and citizen who have suffered massive increases for several years in winter electric rates because the commonwealth lacks adequate infrastructure for natural gas and hydro power.

“High energy costs have real consequences for some of the most important industries in Massachusetts, from advanced manufacturing to hospitals to colleges and universities,” says Robert Rio, Senior Vice President of Government Affairs for AIM, who will testify before the Legislature’s Joint Committee on Telecommunications, Utilities and Energy.

“Energy policy must fundamentally be about cost and competitiveness. Massachusetts must use competitive market forces to determine the most efficient and cost-effective methods for generating and transporting power to the Bay State.

AIM will oppose five bills that would force Massachusetts employers and consumers to purchase significant amounts of electricity generated under long-term contracts with hydro, wind and solar generators. Employers generally support diversification of energy sources and use of renewable energy, but none of the six bills alone will increase the reliability of the electric system at the lowest possible cost to consumers.

All of the bills in one way or another establish long-term contracts for large hydropower or other renewables. The bills together would authorize nearly 2,700 megawatts of power - more than four times the electricity generated by the Pilgrim nuclear power plant – to come from renewables and hydro power under long-term deals without adequate protection for ratepayers.

The impact of long-term contracts on electricity prices could be severe and lead to unintended detrimental changes in the way customers use electricity

Given the large amount of power, even small price discrepancies would have large economic consequences. For instance if just 1,700 megawatts are contracted and the difference is 6 cents per kWh average the additional burden is nearly $1 billion per year to ratepayers.  

AIM will also oppose a Baker Administration proposal to expand the commonwealth’s dysfunctional solar-energy subsidy program. The measure would add $600 million to ratepayer bills by 2020 on top of the $4 billion that business and residential customers are already paying to subsidize solar installations.

The solar program, referred to as net metering, creates a system in which virtually all the savings (except for wholesale fuel costs) attributable to solar installations are a transfer from non-participating ratepayers to those who have solar, increasing costs for those who may not be able to take advantage of solar programs. If everyone took advantage of solar programs, there would be no ratepayers left to pay the cross-subsidy.

Additionally, as solar programs increase, there are fewer customers to pay the cost associated with maintaining the distribution and transmission system, which is still required to be ready willing and able to serve the customer when the sun is not shining. Solar customers also fail to pay their fair share of social costs embedded in distribution rates, causing a massive shift in who pays for programs that serve low-income customers.

“Reducing the cost of solar programs and electricity should be the highest priority. Massachusetts ratepayers are not only spending an enormous amount of money for solar power, we are spending at rates double any other state,” Rio says.

AIM seeks a market-based approach once Massachusetts hits its objective of 1,600 megawatts of solar generation.

Topics: Energy, Business Costs, Charlie Baker

A Welcome Political Consensus on Manufacturing

Posted by Rick Lord on Sep 25, 2015 5:10:22 PM

The commonwealth’s top political leaders agree that manufacturing has a bright future in Massachusetts - and that’s great news for the state economy.

manufacturingGovernor Charlie Baker, House Speaker Robert DeLeo and Senate President Stanley Rosenberg today joined a bipartisan group of business leaders, cabinet secretaries and legislators to kick off Manufacturing Month in Massachusetts from now through the end of October.

The event was organized by the Legislature's Manufacturing Caucus, chaired by Rep. John V. Fernandes, D-Milford, and Senator Eric Lesser, D-Longmeadow.

The observance is intended to highlight the importance of the manufacturing sector; to encourage students and workers to consider manufacturing as a pathway to a successful career; and to recognize the world-class companies, maker spaces and startups that make up the manufacturing sector from Boston to the Berkshires.

For me, as the CEO of the state’s largest employer association, the sight of elected officials from both parties standing together at the State House to celebrate the 7,500 manufacturing establishments in Massachusetts was heartening. Some political leaders may dismiss manufacturing as a dying industry, or overlook it entirely in the pursuit of the “technology sector,” but there is a clear and unified view in Massachusetts that manufacturing and technology are part of the same equation for success in creating jobs.  

More than 250,000 Massachusetts residents work in manufacturing businesses, which accounted for more than 10 percent of gross state product (GSP) - $45.06 billion - in 2013, the most recent year for which numbers are available. Manufacturing workers in Massachusetts earn an average pay of approximately $93,862 per year, among the highest in the country.

And manufacturers invest a far higher percentage of sales in research and development than non-manufacturing companies.

The six companies that took part in today’s ceremony underscore the diversity and promise of making things in Massachusetts – from biopharmaceutical leader and AIM member Biogen to clean-tech startup Greentown Labs, to Maybury Material Handling to grinding firm Boston Centerless to contract machining company Accurounds to another AIM member, officer furniture maker AIS.

The State House event is the first in a series of events scheduled throughout the month of October that will highlight best practices in workforce training, showcase programs that are available to employers and workers, and advance dialogue to address current work force challenges.

The observance will be broken up into five weeks, representing five regions of the state. AIM encourages manufacturers to participate in the celebration by hosting a tour, making a presentation at a local school, or attending one of the many events scheduled across the commonwealth. The weeks will be assigned as follows:

  • Week 1 (September 27-October 3): Central Mass/495/MetroWest 
  • Week 2 (October 4-10): Western Mass/Berkshires/Pioneer Valley
  • Week 3: (October 11-17): Northeast
  • Week 4: (October 18-24): Southeast/Cape & Islands
  • Week 5: (October 25-31): Greater Boston

Employers or school districts interested in participating in an open house in October can visit the following sites for more information, including guidance on how to successfully host an event.

Announcement of Manufacturing Month came one day after Governor Baker and several key administration officials discussed the challenges of training and educating the next generation of manufacturing workers during a meeting of the Massachusetts Workforce Professionals Association. I had the opportunity to introduce the governor at that event and to talk about AIM’s Blueprint for the Next Century, which recommends elevating the role vocational education and other steps to close the skills gaps that threatens to impede the growth of manufacturers in years to come.


Topics: Manufacturing, Massachusetts Manufacturing

AIM to Honor iRobot, Crane, Larson at Centennial Gala

Posted by Christopher Geehern on Sep 24, 2015 10:00:00 AM

Robotics leader iRobot Corporation, U.S. currency maker Crane and Company and Bentley University President Gloria Cordes Larson will be honored for contributions to the Massachusetts economy at the centennial celebration of Associated Industries of Massachusetts (AIM) on November 16.

More than 1,500 business and civic leaders are expected to attend the event at the Boston Convention and Exhibition Center. AIM is the largest employer association in Massachusetts, representing the interests of more than 4,500 companies from every sector of the Bay State economy.

“iRobot, Crane and Gloria Larson exemplify in diverse ways the transformative and lasting power of economic opportunity. Their vision and leadership have allowed thousands of Massachusetts residents to work, support families and build lives for themselves while making this commonwealth a wonderful place to live,” said AIM President and Chief Executive Officer Richard C. Lord.

“Associated Industries of Massachusetts is pleased to inaugurate its next century by recognizing such distinguished people and companies.”

iRobotiRobot has defined a growing robotics industry in Massachusetts that is helping people to do more while defining the future of the state economy.

Founded in 1990 by Massachusetts Institute of Technology roboticists, iRobot has grown into a $557 million enterprise. The company's home robots help people find smarter ways to clean, its defense and security robots protect those in harm's way, and its remote-presence robots enable virtual presence from anywhere in the world. iRobot's consumer and military robots feature proprietary technologies incorporating advanced concepts in navigation, mobility, manipulation and artificial intelligence.

iRobot is also committed to building a future for Science, Technology, Engineering and Math (STEM) education in the United States. The company’s multi-faceted outreach program is a resource for students, parents and educators to share in the excitement of the robotics industry and get an inside look at what iRobot does.

CraneCrane and Company is 200 years older than iRobot, but shares the same passion for success and commitment to its employees. Crane paper products have been closely woven into the fabric of American history, from 19th century stock certificates to correspondence between Franklin and Eleanor Roosevelt.

Crane is perhaps best known for its role as the exclusive supplier of US currency paper since 1879. Since first embedding silk threads in banknote paper in 1844, Crane has been a leader in developing paper-based counterfeit deterrents, such as advanced security threads, watermarks, security fibers, special additives, and fluorescent and phosphorescent elements.

The company has also set an example in minimizing its environmental footprint. Long before it became fashionable or required by law, Crane undertook aggressive and expensive environmental initiatives that have been recognized by environmental organizations and the Commonwealth of Massachusetts.

LarsonFew individuals have left a more significant mark on the Massachusetts economy than Gloria Cordes Larson, who has spent a career serving the public interest as a cabinet secretary, lawyer, senior Federal Trade Commission official, and now, president of Bentley University.

An advisor to governors of both parties, Larson led the commonwealth through a period of breathtaking economic growth as Secretary of Economic Affairs from 1993-1996 before returning to the private sector and undertaking community and economic development roles that included chairing the Massachusetts Convention Center Authority during construction of the $800 million Boston Convention and Exhibition Center.

Larson has led the transformation of Bentley from a college to a university and established new programs focused on the value of a business education.  At the undergraduate level the school expanded its commitment to a “fused” curriculum with additional courses co-taught by business and arts and sciences faculty.  One of its most recent innovations, the Bentley MBA, is an 11-month global program where students pursue four 10-week modules in a collaborative, studio-based setting.

A group of 27 visionary Massachusetts industrialists formed Associated Industries of Massachusetts in 1915 to work with government to advance economic opportunity for the people of the commonwealth. The association now represents organizations from every sector of the economy in what has become a unique and enduring example of employer engagement in public policy.

AIM and its member employers are observing the organization’s centennial by developing the Blueprint for the Next Century, a plan to ensure the long-term economic future of Massachusetts. The Blueprint maintains that economic opportunity will depend Massachusetts’ ability to create the best system in the world for educating and training workers; to ensure a competitive cost structure across all industries; to reform the regulatory system; and to moderate the burdens of high costs for health care and energy.

Register for the AIM Centennial Gala

Topics: Associated Industries of Massachusetts, AIM Centennial

Attorney General Cites Dysfunctional Health-Care Market

Posted by Katie Holahan on Sep 21, 2015 9:25:00 AM

A continued migration of patients to high-priced doctors and hospitals means that Massachusetts is unlikely to meet its benchmark for health-care cost increases in 2015, according to a new report by Attorney General Maura Healey.

AG.Maura.HealeyThe report finds that widely disparate prices paid to medical providers – differences unexplained by provider quality – have created a market in which patients continue to utilize higher cost providers, driving up health care costs.  The effects of the market dysfunction, coupled with anticipated growth in pharmacy costs and utilization of health care services, raise serious concerns about the commonwealth's ability to meet the 3.6 percent benchmark for increases in health costs.

“Not enough has changed and it certainly has not changed fast enough,” Healey said Friday during a meeting with the Associated Industries of Massachusetts Board of Directors.

“We need to do more. We have to act now.”

The report finds that the most highly-paid doctors and hospitals continue to grow market share, further increasing costs. And global payments, while having positive effects, have tended to lock in historic payment differentials, thus sustaining disparities in the resources available to different providers to carry out their mission.

The report recommends encouraging innovation in the health-care industry and strengthening and expanding consumer incentives - initiatives that will necessarily involve employers.

The report points to the importance of simplifying the cost and quality information provided to employers when they are choosing coverage, especially across providers. Clear information should also be provided to employees during enrollment and when they are choosing their primary care group.

On the "supply side" – doctors, hospitals and insurers -  the attorney general’s report suggests implementing incentives and penalties evenly by giving efficient providers more room to grow (under the benchmark) than less efficient providers. The report also points to different ways of monitoring and understanding disparities in health care resources, whether that be directly regulating variation in provider prices or tracking income/health adjusted status by zip code.

“This latest in a series of reports on health-care by the Massachusetts attorney general raises concerns about rising costs for employers who provide health insurance to workers,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts and a member of the Massachusetts Health Policy Commission.

“The data and graphs in the report have real consequences for real employers and real workers. The cost of health insurance remains a central issue for the Massachusetts economy.”

The report found that enrollment in tiered insurance products has increased, but the presence of these products has not resulted in an overall shift in patient volume away from higher priced providers. Current approaches appear hampered by inconsistent incentives for consumers to obtain care at higher value providers.

The Health Policy Commission will conduct its annual hearing on health-care costs in Massachusetts October 5 and 6.


Topics: Health Care Costs, Health Insurance, Attorney General Maura Healey

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