Why Are Health-Care Costs Rising?

Posted by Katie Holahan on Feb 9, 2016 2:33:45 PM

A study released today by the Massachusetts Association of Health Plans, Associated Industries of Massachusetts (AIM), the National Federation of Independent Business (NFIB), and the Retailers Association of Massachusetts (RAM), identifies 14 key factors in the rising cost of health care.

HealthCost.jpgThe report is based on a review by Freedman HealthCare (FHC) of nine recent studies of the Massachusetts health-care marketplace.

"The rising cost of health care is a significant challenge for Massachusetts employers. These reports shed light on the factors driving health care costs and will inform the conversation on measures to contain the cost of health care," said Rick Lord, President and Chief Executive Officer of Associated Industries of Massachusetts.

Here are the 14 factors:

  1. Provider price, not utilization of health care services, is the biggest cost
    driver in the Massachusetts market. (Providers are doctors, hospitals and other entities that render medical care.)
  2. There is a significant gap between the highest and lowest paid providers.
  3. Health care is most often delivered in higher priced settings.
  4. High prices do not directly correlate with high quality of care – in other
    words, the highest paid providers do not necessarily provide the highest
    quality of care.
  5. Providers with the highest public payer case mix have the lowest
    commercial reimbursement.
  6. Academic medical centers are associated with higher health care costs.
  7. In response to increasing provider prices, the commercial market is seeing
    increased consumer cost sharing.
  8. Market share impacts health care costs by influencing price, utilization,
    and available resources.
  9. There is growing policy concern that provider consolidation may lead to
    higher prices, rather than savings from integration of care or improved
  10. Despite its increasing promotion, the widespread adoption of global
    payments faces significant challenges, and there is limited evidence to
    suggest that global payments produce cost savings.
  11. Performance against the cost growth benchmark is mixed.
  12. Pharmaceutical costs have been increasing and are expected to increase
    in the future.
  13. The state is increasingly focused on behavioral health – specifically, the
    high cost associated with behavioral health conditions, the challenges of
    clinical and administrative integration of care, and the need for better data.
  14. Due to persistent and increasing disparities in provider prices over the
    past several years, the state is recommending policy action be taken to
    reduce excessive price variation.

Topics: Health Care Reform, Health Care Costs, Health Insurance

Infographic | The Cost of Solar-Energy Subsidies

Posted by Bob Rio on Feb 4, 2016 11:26:15 AM

Here is AIM's new ad opposing the $8 billion giveaway to solar energy developers.


Topics: Energy, Solar Subsidies

Employers Remain Optimistic, Despite Market Volatility

Posted by Christopher Geehern on Feb 2, 2016 9:38:18 AM

Confidence among Massachusetts employers remained steady during January as optimism about the state economy offset uncertainty about China and turbulent financial markets.

BCI.January.2016.jpgThe Associated Industries of Massachusetts (AIM) Business Confidence Index rose 0.5 points to 55.8 last month, starting 2016 well above the 50 mark that denotes a positive economic outlook. The increase was driven by a 1.8-point surge in the index measuring employer attitudes about Massachusetts.

Confidence remained lower than it was in January 2015.

“The fact that employer confidence remained solid during a month in which the Standard & Poor’s 500 Index was at one point off 9 percent and oil dropped below $27 a barrel points to the fundamental, underlying strength of the Massachusetts economy,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The Massachusetts Index has been above its national counterpart for 80 consecutive months, and that perception was bolstered by the decision in January by General Electric to locate its corporate headquarters in Boston. GE’s decision was important, not only for the 800 jobs it will bring, but because the company cited Massachusetts’ leadership in knowledge industries as its reason for coming.”

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 ended 2015 down for the year, but remained consistently in optimistic territory for the first 12-month period since the Great Recession.

State Indicator Leads National Counterpart

Most of the sub-indices based on selected questions or categories of employer rose a point or two in January, though all remained down year-over-year.

The Massachusetts Index, assessing business conditions within the commonwealth, jumped 1.8 points to 58.1, starting the year more than a point lower than last January. The U.S. Index of national business conditions slipped to 49.9 on the month, leaving it more than four points lower than a year ago.

The Current Index, which assesses overall business conditions at the time of the survey, increased slightly to 54.6, while the Future Index, measuring expectations for six months out, rose almost a full point to 57.0.

“Employers clearly do not believe that the correction in financial markets signals an overall economic slowdown,” said Alan Clayton-Matthews, Associated Professor of Economics and Public Policy at Northeastern University and a BEA member.

“Massachusetts employers foresee positive business conditions through at least the first half of 2016, and that comports with economic forecasts that Massachusetts will reach full employment during the year.”

Employment Strengthening in 2016

The three sub-indices bearing on survey respondents’ own operations were mixed in January.

The Company Index, reflecting overall business conditions, was up 0.3 points at 57.0; the Sales Index shed 1.1 points to 57.1; and the Employment Index rose 1.3 points to 55.1.

“The increase in the Employment Index is good news for Massachusetts. Our survey found that 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment,” said Katherine A. Kiel, Professor of Economics, College of the Holy Cross, another BEA member.

“Expectations for the next six months were even stronger – 37 percent hiring and only 10 percent downsizing.”

Confidence levels in December were similar outside Greater Boston (56.3, +0.3) and within the metropolitan region (56.6, +1.4). Employers in the manufacturing sector continued to be less positive (53.8, -0.3) than other employers (58.4, +1.2).

“Manufacturing is the sector where uncertainty about China and other foreign markets becomes most apparent, though manufacturers remain generally sanguine about the next six months,” Kiel said.

Employers of all sizes recorded positive confidence levels, with the mid-size group lagging behind both larger and smaller companies.

AIM’s President and CEO Richard C. Lord, a BEA member, said the positive economic climate that persuaded General Electric to locate in Massachusetts must be preserved going forward.

“GE’s decision to leave Connecticut underscored the fact that taxes and the business environment matter a great deal to companies in their location decisions,” said Lord, who once worked for GE.

“We look forward to working with the Legislature to ensure that employers all over the commonwealth are able to do what they do best during 2016 – invest, grow and create opportunity for the people of Massachusetts.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Massachusetts Employers See Clinton as Next President

Posted by Christopher Geehern on Jan 25, 2016 3:13:52 PM

Massachusetts employers overwhelmingly believe that Hillary Clinton will be the next president of the United States.

Presidential_Candidates.jpgPerhaps more surprisingly, a slim majority of those same employers believe that Clinton should be the next president.

A poll taken as part of the Associated Industries of Massachusetts Business Confidence Index survey for January found that 49 percent of those responding believe Clinton will win the presidential election in November. Thirty-four percent predict that Donald Trump will move to 1,600 Pennsylvania Avenue, while 10 percent expect Marco Rubio and another 10 percent Ted Cruz to take the oath of office.

Ask employers who should be the next president of the United States and Clinton still comes out on top - 26 percent compared to 21 percent for Trump. Ohio Governor John Kasich garners 17 percent, former Florida Governor Jeb Bush 16 percent, Rubio 13 percent, Cruz 11 percent and New Jersey Governor Chris Christie 10 percent.

A quarter of all responding employers checked “other,” with the most popular choice being former Massachusetts governor and Republican presidential nominee Mitt Romney.

“The survey underscores the degree to which so-called establishment Republican candidates are splitting the votes of people who do not prefer either of the two front-runners, Trump and Cruz. Add the totals for Kasich, Bush, Rubio and Christie and you’re at 55 percent,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Lord said the results also reflect the fact that employers prefer candidates such as Clinton, Kasich and Bush with established records of dealing with business issues than insurgent populists like Trump, Cruz and Vermont Senator Bernie Sanders.

The first caucuses of the 2016 presidential campaign will take place Monday in Iowa. New Hampshire’s first-in-the-national primary is scheduled for February 9.

Recent polls tracked by Real Clear Politics show Sanders leading Clinton in New Hampshire by anywhere from three to 19 points. The polls show a mixed picture of the Sanders/Clinton race in Iowa.

Trump dominates the Republican field by between 7 and 20 points in New Hampshire and runs slightly ahead of Cruz in Iowa.

Results of the AIM survey results are based on responses from 168 Bay State employers. The survey listed all candidates alphabetically, without party affiliation.

Topics: Massachusetts employers, Election 2016

AIM Asks Feds to Investigate Scam Calls to Employer

Posted by Tom Jones on Jan 25, 2016 11:56:15 AM

Associated Industries of Massachusetts has asked federal officials to investigate an apparent scam in which a caller claiming to be from the U.S. Department of Labor calls an employer and demands personal information about employees as part of a bogus 401(k) plan audit.

An employer reported to AIM last week that she received a call from someone claiming to be a subcontractor for the Labor Department authorized to perform 401(k) audits. The caller threatened the employer with significant fines (up to $800,000) for failing to cooperate. The caller was seeking a list of all employees covered under the company’s 401k plan, including names and Social Security numbers.

The employer suspected the call was fraudulent and hung up. The employer then searched the phone number and found it was a frequently used scam number based in Nevada. The number was 702-258-9476. A review on the Web found a number of blog discussions about the fraudulent use of the number to sell various unwanted products.

AIM has forwarded the information to the Department of Labor to confirm that the phone call did not come from a DOL employee or contractor. The DOL representative forwarded the information to the Employee Benefits Security Administration (EBSA) for further investigation.

If you receive a similar phone call, please notify AIM at 800-470-6277 or via email (Tom Jones or Terry Cook so that we may forward it to the DOL for its investigation.   

Topics: Retirement, Human Resources

Video Blog | Economic Growth, Health Costs, Talent Development

Posted by Christopher Geehern on Jan 22, 2016 3:02:53 AM

The 2016 Associated Industries of Massachusetts Economic Outlook Forum featured a panel of experts looking at prospects for the Massachusetts economy. The panel, moderated by WBZ radio Business Editor Jeff Brown, included Jay Ash, Secretary of Housing and Economic Development; Martha Sullivan, President and CEO of Sensata Technologies in Attleboro; and Dr. Howard Grant, President and CEO of Lahey Health in Burlington.


Topics: Skills Gap, Health Care Costs, Massachusetts economy, AIM Executive Forum

The State of Massachusetts Business

Posted by Christopher Geehern on Jan 20, 2016 1:58:45 PM

Associated industries of Massachusetts President and Chief Executive Officer Richard C. Lord delivered his annual State of Massachusetts Business address on January 15, 2016 to more than 250 business leaders from throughout the commonwealth.

Lord said the decision by General Electric Company to base its headquarters in Boston underscores a coalescing of economic activity in major global cities, a development that simultaneously benefits Massachusetts and challenges leaders to spread the benefits beyond Route 495.

Topics: Massachusetts economy, AIM Executive Forum, Jobs

Why the 'Millionaire Tax' Will Hurt Jobs

Posted by John Regan on Jan 19, 2016 7:30:00 AM

Editor's note - John R. Regan, Executive Vice President of Government Affairs for Associated Industries of Massachusetts (AIM), will deliver the following comments today to the Joint Committee on Revenue in opposition to H.3933, An Initiative Petition for An Amendment to the Constitution of the Commonwealth to Provide Resources for Education and Transportation through an additional tax on Incomes in excess of One Million Dollars (Ballot Initiative 15-17)

ManufacturingWorkerSmall.jpgIt is no accident that we call ourselves a “commonwealth.” 

The preamble of the Massachusetts Constitution says, “the body politic is formed by a voluntary association of individuals: it is a social compact, by which the whole people covenants with each citizen, and each citizen with the whole people.”

This notion is affirmed in the language of Article XLIV of the Constitution, which states that taxes “shall be levied at a uniform rate throughout the commonwealth upon incomes derived from the same class of property.”

Now comes this petition for an amendment changing the language of Article XLIV in a manner that would increase by 78 percent taxes paid by those with incomes in excess of $1 million, adjusted annually to reflect any increases in the cost of living by the same method used for federal income tax brackets.

As a mathematical proposition, those earning $1 million of income per year currently pay 95 percent more tax than those making $50,000 annually. Income of $50,000 generates a tax obligation of $2550, while the $1 million dollar income generates $51,000 of income tax (all things being equal).  According to the ballot question language, every dollar of income above a million will be subjected to a surtax of 4 points over the current 5.1%

Since the procedural options for the committee are limited, AIM will leave to the wisdom of the voters the equity and advisability of a 78 percent increase of the tax obligation for fewer than 1 percent of our fellow citizens 

Some facts are important to note:

  • This significant new tax burden will fall on individuals and certain business entities paying taxes at the individual rate; it is hard to imagine that this new obligation will not impede investment, employment and certain locational decisions.
  • The Department of Revenue estimates (with some assumptions) that the proposal could generate $1.6 billion to $2.2 billion, with $1.9 billion identified as the median.
  • The $1.9 billion tax increase would be paid by roughly 19,500 filers, 80 percent of whom are anticipated to file with some business income.
  • Those 19,500 filers represent half of 1 percent of all tax returns filed with the Department of Revenue.
  • Eighty-six percent of the affected taxpayers would be married couples filing jointly, and 11 percent would be individual filers with earnings of more than $1 million.

Many advocates for this ballot question focus on the revenue derived therefrom as opposed to the uneven method of its generation.  Setting aside the fairness, or lack thereof, I would like to turn to the issue of how the new revenue is to be used.

The language of the question states that the revenues raised by the new tax shall be used “…to provide the resources for quality public education and affordable public colleges and universities, and for the repair and maintenance of roads, bridges and public transportation, all revenues received in accordance with this paragraph shall be expended, subject to appropriation, only for these purposes.”

Section 2 of Article XLVIII of the Constitution clearly enumerates so-called “Excluded Matters” by stating in part, “No measure… that makes a specific appropriation of money from the treasury of the commonwealth, shall be proposed by an initiative petition…”

So for the question to be constitutionally valid, the legislature would retain the ability to use the new revenue derived from the 78 percent tax increase for any public purpose the legislature deems appropriate. 

Any representation about how the money is used is wishful thinking that the constitution itself prohibits.

Last week, the commonwealth was successful in landing the eight largest corporation in the world to Boston.  This company is leaving its current home state in part because of concerns about unfair taxation.  We should look long and hard at this question that raises so much from so few and ask, does this imbalance make the commonwealth a better, or a worse place?

AIM would suggest that it makes Massachusetts an unfair place.

Topics: Massachusetts economy, Taxes, Jobs

GE Move Uplifts Economic Outlook Forum

Posted by Christopher Geehern on Jan 15, 2016 11:41:53 AM

The decision by General Electric Company to base its headquarters in Boston underscores a coalescing of economic activity in major global cities, a development that simultaneously benefits Massachusetts and challenges leaders to spread the benefits beyond Route 495.

Panel-1.jpgGE’s blockbuster announcement was topic number one this morning as business and government leaders gathered for the annual Associated Industries of Massachusetts Economic Outlook Forum in Waltham.

AIM President and Chief Executive Officer Richard C. Lord said metropolitan areas like Boston, with its rich array of universities, hospitals and financial resources, enjoys its own economic gravitational pull in a rapidly changing economy. That pull, he said, raises two important questions for Massachusetts.

“First, as anyone who sits in Expressway traffic or waits for the T in January will tell you, rapid growth strains the physical and financial resources of the state and its citizens. And then talk to young people trying to afford housing close to their jobs in a city where the Alston-Brighton triple decker in which Ted Williams once lived now sells for more than $1 million with units that rent at more than $2,000 per month,” Lord told more than 250 people who attended the forum.

“Second, and most important, what happens to the economy outside Boston? How do we as a “common wealth” address the widening imbalance between the economically thriving ‘eds and meds’ economy of Greater Boston and the more traditional economy that dominates the commonwealth from Route 495 to Berkshire County?”

Secretary of Housing and Economic Development Jay Ash compared the importance of GE’s move to the Celtics’ acquisition of all-star forward Kevin Garnett in 2007.

“The Celtics were already a good team, a playoff team, but when Kevin Garnett came, he was a Hall of Famer who put the Celtics over the top,” said Ash, who led the commonwealth’s efforts to land GE and its 800 headquarters and research jobs.

The key to the deal, Ash said, was cohesive approach adopted by Governor Charlie Baker, a Republican, and Boston Mayor Matry Walsh, a Democrat.

“I’ve been in politics all my life and I’ve never seen two leaders working so closely together, let alone leaders from different parties working so closely together,” he said.

Ash made his comments during a panel discussion on prospects for the Massachusetts economy in 2016.

Martha Sullivan, Chief Executive Officer of Sensata Technologies in Attleboro, said developing engineering and other technical talent remains a priority for her century-old company, which makes many of the sensors that are the basis of what GE and others call the “industrial Internet.”

Sullivan said that companies must have a vision that attracts talent.

“You have to have a culture that is welcoming, with a diversity of talent, thought and background,” she said.

Dr. Howard Grant, President and Chief Executive Officer of Lahey Health in Burlington, said the Massachusetts economy is being held back by health-care costs that run 36 percent more than the national average. It doesn’t have to be that way, Grant said, if employers and consumers seek treatment in moderately priced community hospitals where medical outcomes match those of expensive academic medical centers.

“We need to do something about that,” Grant said.

Lord said in his annual State of Massachusetts business address that it’s good to be Massachusetts at the dawn of 2016:

  • The commonwealth is likely to approach full employment this year.
  • Massachusetts employers added almost 68,000 jobs during the first 11 months of 2015.
  • Economic output grew 25 percent faster than the nation as a whole, and per-capita personal income remains the second highest in the United States, 128 percent of the national average.
  • AIM’s widely followed Business Confidence Index remains solidly optimistic, despite a marked slowdown in foreign export markets.
  • Massachusetts posted a record-breaking year for venture capital funding in 2015, with $7.4 billion invested across 531 deals.
  • And Bloomberg just named Massachusetts the most innovative state in the nation.

Topics: Health Care Costs, Massachusetts economy, AIM Executive Forum

GE Move to Boston Represents Watershed for Economy

Posted by Christopher Geehern on Jan 13, 2016 2:55:26 PM

Today’s decision by General Electric Company to locate its corporate headquarters in Boston represents a watershed for the Massachusetts economy, the commonwealth’s most influential employer association said.

GE.jpgAssociated Industries of Massachusetts, which counts GE among its charter members, is proud to have played a significant role in the months of discussions that took place among the company, Boston and state officials and several cornerstone Bay State employers. The decision burnishes Greater Boston’s already strong reputation as a rapidly growing center of ideas and innovation.

“It’s a great day for Massachusetts as General Electric Company, one of the most respected companies in the world and a charter member of Associated Industries of Massachusetts (AIM), has chosen to locate its corporate headquarters in Boston,” said AIM President and Chief Executive Officer Richard C. Lord, who participated in a meeting with GE executives in the North End of Boston in September.

“GE’s move brings a host of benefits to the Massachusetts economy, from top-level jobs to innovation to an unmatched global market presence. AIM and its 4,500 member employers welcome GE headquarters to the commonwealth and congratulate the Baker and Walsh administrations for recognizing that taxes, work force and other elements of the business climate really matter in corporate location decisions.”

The company said Boston is a logical location for a company seeking to marry manufacturing with advanced technology.

“GE aspires to be the most competitive company in the world,” GE Chairman and CEO Jeff Immelt said in a statement.

“Today, GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry. We want to be at the center of an ecosystem that shares our aspirations. Greater Boston is home to 55 colleges and universities.

“Massachusetts spends more on research and development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world. We are excited to bring our headquarters to this dynamic and creative city.”

GE will bring roughly 800 jobs to Boston - 200 from corporate staff and 600 digital industrial product managers, designers and developers split between GE Digital, Current, robotics and Life Sciences. A GE Digital Foundry will be created for co-development, incubation and product development with customers, startups and partners.

GE already has a significant presence in Massachusetts, with nearly 5,000 employees across the state in businesses including Aviation, Oil & Gas and Energy Management. In 2014, GE moved its Life Sciences headquarters to Marlborough, and in 2015 GE announced its energy services start-up, Current, would also be headquartered in Boston.

AIM worked with Governor Charlie Baker and Boston Mayor Marty Walsh to bring a handful of business leaders together to meet with GE’s site selection team for a dinner at Tresca in the North End on September 14. Representatives from two AIM member companies – EMC and State Street Corporation – joined Lord, Baker, Walsh and Secretary of Housing and Economic Development Jay Ash.

“One of the strengths I talked about was the fact that the governor, Legislature and the mayor have worked together in a bipartisan manner to create a predictable business climate,” Lord said.

He noted that GE was the second company to join AIM in 1915 and that GE Executive Richard Rice, served as the first chairman of the association from 1915-1917.

Topics: Massachusetts economy, Technology, Jobs

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