Posted by Christopher Geehern on Fri, May 10, 2013 @ 01:31 PM
Governor Deval Patrick invoked the community response to the Boston Marathon tragedy today to urge business leaders to support his vision of creating economic opportunity through a $1.9 billion tax and reform package for transportation and education
“I think you know that my vision for Massachusetts is of a unified community, where we work together to build a better future for everyone,” the governor told 550 people at the 2013 AIM Annual Meeting in Waltham.
“In some ways, I think we got a glimpse of that in the past couple of weeks. So many lives were suddenly, viciously and profoundly affected by the bombings on Marathon Monday. And yet out of the dust of that tragedy emerged a strong sense of community, the notion of common stake and common cause. The bravery of first responders, the supreme professionalism of the medical teams, the acts of kindness and generosity by ordinary citizens – in these ways and others the strength of our community was on display for the world and, most of all, for each other. “
Patrick said he hears daily from people concerned about finding or keeping jobs, paying for college, the quality of their children’s education and the reliability of the MBTA – and suggested that business people hear the same concerns. He said the commonwealth must simultaneously grow jobs and be prepared to make the investments needed for that growth.
“I am not running for anything else. I have no agenda other than to make our commonwealth stronger, to leave it better than I found it. We have a rare chance right now to do some lasting good in transportation and education, in growth and opportunity, for our time and the generation to come. If that’s what you’re interested in, I look forward to working with you,” he said.
The governor also emphasized that his administration has made hard choices about making state government more efficient.
“We have eliminated over 6,000 positions in state government, consolidated agencies, shut down the Turnpike Authority, reformed the pension system, asked employees to pay a greater share of their health care benefits, and much more. We have, with your help, undertaken a comprehensive review of regulations and cut the time for state approvals to a fraction of what it once was.
“Of course we are not done. But it’s a fact that this administration has not only saved taxpayers billions of dollars and made state government vastly more efficient, but we have accomplished more of AIM’s agenda than any administration in 20 years.”
The Massachusetts House and Senate both passed much smaller tax packages focused exclusively on transportation. Patrick said today he will monitor the final bill that emerges from a conference committee to ensure that it provides revenue that is both reliable and timely.
“I am here to ask you to join us in that work. Because the work of building the platform for growth is vital to the business community. Some of that will involve taxes. Some will involve reforms. They are not mutually exclusive, but two sides of the same coin,” he said.
The governor’s speech was part of an Annual Meeting that also saw AIM honor several companies and organizations for outstanding achievements.
- Massachusetts Business Alliance for Education (MBAE) received the 2013 Legacy of Leadership Award
- The Manufacturing Advancement Center Workforce Innovation Collaborative (MACWIC) won the 16th Annual Gould Education & Workforce Development Award
- EMD Milipore, Billerica; Kinefac Corporation, Worcester; and Lenox, East Longmeadow all received Global Trade Awards
Posted by Christopher Geehern on Thu, May 09, 2013 @ 02:56 PM
Associated Industries of Massachusetts has joined Procter & Gamble, 3M and other companies in challenging a proposed insurance-company acquisition that could leave scores of Bay State businesses exposed to so-called long-tail asbestos and environmental liabilities.
The companies and AIM last week filed a petition to intervene in the Pennsylvania Insurance Department review of Trebuchet US Holdings Inc.'s proposed $2.2 billion purchase of OneBeacon Insurance Co. and Potomac Insurance Co. Trebuchet, a subsidiary of the Bermuda-based Armour Group Holdings Ltd., filed its application to acquire the two companies in February.
AIM and the other petitioners fear the proposed transaction would impede the ability of thousands of companies to get claims paid under environmental insurance coverage purchased from a predecessor to One Beacon, the Commercial Union Insurance Companies.
“Under the proposed transaction, those legacy policies, and the claims-paying obligations that are part of their core promise, will be jettisoned by (One Beacon) and shunted over to a runoff operation with a suspect capital structure and limited resources for satisfying valid claims under hundreds, if not thousands, of legacy policies issued by predecessor entities…” the petition said.
The document indicates that AIM and the other petitioners “are concerned that the conversion of the Acquired Companies into a runoff vehicle, operating with a significantly reduced policyholder surplus and decoupled from (One Beacon’s) ongoing business operations and pooled reserve and reinsurance structure, may impair the financial viability of the Acquired Companies and compromise their ability to pay valid claims arising under the legacy Commercial Union policies.”
The policies that the companies bought were in effect from the 1930s until the 1980s and provided "broad protection" against claims and lawsuits brought by third parties seeking compensation for personal injuries or property damage that allegedly occurred during the relevant policy period. The policyholders were covered even if the lawsuits or claims filed against them occurred many years after the alleged acts were committed and even if the injuries or damage weren't apparent during the coverage periods.
The companies seeking to intervene with Pennsylvania authorities say they had received "substantial numbers" of asbestos, environmental, toxic tort and other claims seeking financial recovery for "latent bodily injury and property damage that allegedly developed over the course of many years." The list of petitioners includes the Pennsylvania Manufacturers Association, ITT Corporation, Pentair Ltd. of Mansfield, Invensys of Foxboro, Belden Inc. and The William Powell Company.
Robert Rio, Senior Vice President of Government Affairs at AIM, said the association cannot estimate the number of Massachusetts manufacturing companies with liability policies that could be affected by the OneBeacon acquisition. He noted, however, that Commercial Union was a large writer of property/casualty policies in Massachusetts for decades.
“The broad coverage provided by these legacy policies is both valuable and irreplaceable, as policies providing comparable protection are no longer available at any price in the current insurance markets,” Rio said.
The petition to intervene in the case also raises concerns about the fact that most of the exhibits submitted by Trebuchet - including financial statements, business plans for the acquired runoff entities, and reinsurance arrangements – are classified as “confidential,” “proprietary” and “trade secret.”
The companies maintain that the “pervasive non-disclosure of these materials appears designed to render the Proposed Transaction as opaque as possible, and to deprive policyholders whose rights may be impaired by the Proposed Transaction of any meaningful opportunity to assess its financial impact on the security of their policies.”
Posted by Tom Jones on Thu, May 09, 2013 @ 09:46 AM
It appears increasingly likely that employers will not have to post notices in the workplace informing employees of their right to join a union.
The United States Court of Appeals for the District of Columbia Circuit on Tuesday vacated the controversial National Labor Relations Board (NLRB) rule requiring six million private sector employers in the United States to post a notice of employee labor rights. The decision, rendered in a case brought by the National Association of Manufacturers (NAM), comes 13 months after the courts temporarily blocked implementation of the rule pending resolution of legal questions.
The three-judge appeals court panel ruled that the posting requirement compels employers to speak about employees' labor law rights in violation of a provision of the National Labor Relations Act (NLRA) that protects employers' rights to free speech about union issues.
The court writes that the NLRB rule violates the NLRA “because it makes an employer’s failure to post the Board’s notice an unfair labor practice, and because it treats such a failure as evidence of anti-union animus in cases involving, for example, unlawfully motivated firings or refusals to hire—in other words, because it treats such a failure as evidence of an unfair labor practice.”
AIM and other employer groups have opposed the rule as an unfair government effort to promote union organizing. The regulation is part of an ongoing effort by an activist NLRB to tilt the labor-relations playing field toward organized labor during the past three years.
“The courts have stated unequivocally that the NLRB overstepped its authority with the union-rights posting requirement,” said Michael Rudman, a labor-relations expert for AIM.
The union notice rule requires employers to post an 11-by-17-inch notice in a prominent location explaining the right of workers to join a union and bargain collectively to improve wages and working conditions. The posters also explain that workers have a right not to join a union and that it is illegal for union officials to coerce employees into unionizing.
“Stopping the NLRB’s burdensome agenda of placing itself into manufacturers’ day-to-day business operations is essential to preventing further government-inflicted damage to employee relations in the United States,” said Jay Timmons, President of NAM.
It is unclear whether the NLRB will appeal the decision to the U.S. Supreme Court.
The decision marked the latest in a series of judicial setbacks for the government agency charged with enforcing laws governing labor-management relations.
The Court of Appeals ruled in January that President Barack Obama did not have the power to make recess appointments to the National Labor Relations Board in January 2012. NLRB is appealing that decision, which could invalidate rulings, determinations and rulemaking by the NLRB over the past year.
Posted by Kristen Lepore on Thu, Apr 25, 2013 @ 02:31 PM
Attorney General Martha Coakley is warning Massachusetts officials to step up their scrutiny of the health-care market to protect the ability of employers and consumers to make decisions that could reduce their health premiums.
In a new report entitled Examination of Health Care Costs and Drivers, Coakley notes that employers and consumers are working to control health care costs by enrolling in health insurance products that offer tiered or limited networks. But she says that health plans continue to pay providers a wide range of amounts for comparable services and that providers are increasingly aligning in ways that may cloud efforts to move toward a more efficient health care system.
Coakley offers five recommendations she said will create the transparency needed to protect lower-cost health care providers and maintain consumer options. The recommendations urge state oversight organizations to collect detailed financial information on the health-care market and to evaluate proposed hospital mergers in light of changes in contract prices, referral patterns, market share, and volume to higher cost facilities - and the impact of all of these factors on total costs to consumers.
“Massachusetts still faces significant challenges in addressing historic market dysfunction, aligning payments with value, and controlling overall health care spending. To achieve these goals, all health care market participants must be actively engaged in promoting value-based health care,” the attorney general writes in her third major study of health-care cost trends in Massachusetts. The study was released yesterday.
Massachusetts employers and consumers pay the highest health-care premiums in the country at $16,953 per year for a family plan, according to the Commonwealth Fund. Health-insurance premiums in Massachusetts grew 67 percent for individual plans and 72 percent for family plans from 2003 to 2011, raising the burden on purchasers from 12.6 to 18 percent of median household income.
The attorney general’s report indicates that the health cost control law signed by Governor Deval Patrick in August 2012, which created systems to increase scrutiny of medical cost variations, will require careful oversight to rein in those differences. The law limits increases in medical costs to the overall rate of economic growth, calls for paying doctors for outcomes instead of procedures, steers patients to doctors who provide good care at reasonable prices, and coordinates care to keep patients healthy and out of the hospital.
“As described in our prior Reports, without other fundamental changes, a shift to global payments may actually exacerbate the price escalation associated with market dysfunction by establishing widely different per member per month rates based on historic pricing disparities,” the study says.
The attorney general issued six key findings about the health care market:
- Employers and individual health care purchasers have increasingly moved toward health insurance products with tiered networks and high deductibles, and moved away from HMO products that restrict referrals through a primary care gatekeeper.
- Purchaser enrollment trends have significant implications for health plans designing products and providers managing risk contracts.
- Health plans continue to pay providers a range of amounts under traditional “fee for service” arrangements and global payment arrangements to care for patients of comparable health.
- Health plan product designs affect risk selection, total medical spending, and care management.
- Providers are taking on increased insurance risk without consistent mitigation by health plans.
- Provider consolidation and alignments have significant market implications that should be carefully reviewed, particularly where proposed consolidations may reduce access to lower-cost options for consumers and undermine efforts to promote value-based decisions by purchasers.
Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts and a member of the state Health Policy Commission (HPC), welcomed Coakley’s report.
“Attorney General Coakley provides refreshing clarity to a complex topic with this new report, as well as with her previous studies in 2010 and 2011. The report underscores the need for transparent and reliable information to identify, measure, and correct problems with the health care market,” Lord said.
The ability of Massachusetts to keep health spending equal to overall economic growth is particularly important in light of significant potential cost increases that employers and consumers will face when federal health reform comes to the commonwealth next year.
Posted by Brad MacDougall on Thu, Apr 25, 2013 @ 12:02 PM
The Massachusetts House of Representatives last night passed a $34 billion Fiscal Year 2014 budget that increases spending by 4 percent, avoids increases to the income tax and ensures the privacy of companies that exercise their statutory right to use tax benefits.
The blueprint includes between $500 million and $800 million that Beacon Hill lawmakers have already passed to improve roads, bridges and mass transit. The transportation funding package includes $110 million from increasing the gasoline tax 3 cents per gallon and then indexing the levy to inflation; $161 million from a tax on computer services; $110 million from tobacco taxes; and $83 million from changes to utility classification and sales sourcing.
The House budget also includes several key provisions for employers, including one that would keep private the financial information of companies that use the Investment Tax Credit and the Research and Development Tax Credit. The bill removes two employer health-care contributions - the Fair Share Assessment and Medical Security assessment – while requiring that any increases to a new $50-per-worker Employer Responsibility Contribution for health care be approved by the Legislature.
House members approved the budget by a 127 to 29 margin.
“The House budget takes a prudent approach by reducing dependence on one-time revenues and not instituting dramatic tax policy changes. Such ongoing prudence has been an important element of Massachusetts’ positive standing with bonding rating agencies,” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.
“Speaker Robert DeLeo and Ways and Means Committee Chair Brian Dempsey clearly understand that we remain in a time of slow job growth. This budget and future legislative proposals must maintain a long-term approach that sustains vital government services while creating a predictable environment for investment and job creation.”
The budget now goes to the state Senate for debate in May. A conference committee will then attempt to craft a final bill in time for the start of the new fiscal year on July 1.
The financial privacy provision, contained in an amendment filed by Dempsey, removes the Investment Tax Credit and R&D Tax Credit from new requirements contained elsewhere in the budget that companies receiving credits file detailed financial information that would then be posted to the Web. AIM maintained that the ITC and R&D credit should be exempted because both are granted as a matter of statutory right, while other tax benefits are individual credits granted through a public application process through a state agency.
AIM has supported moves to eliminate the Fair Share Assessment – created under the 2006 state health reform law – and Medical Security assessment because both will become unnecessary under federal health reform. The original proposal to replace those two assessments with the Employer Responsibility charge generated concern because it gave a board of three unelected people broad authority to raise the assessment by up to 5 percent annually. The House budget would require that panel to submit proposed increases to Beacon Hill.
Fair Share mandates that employers with 11 or more full-time equivalent employees make a “fair and reasonable” contribution toward the health-care costs of employees or pay an assessment of up to $295 per employee per year. The Medical Security Program requires companies to contribute money to provide low-income unemployed people with health insurance.
An AIM-supported amendment that would have ended a three-year delay in implementation of the so-called FAS 109 deduction was withdrawn, though the House declined to go along with the administration's proposal to eliminate the deduction altogether. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences. The deduction was adopted as part of the 2008 debate over adoption of combined tax reporting in Massachusetts.
Employers also remain concerned about a section of the budget that impacts the tax audit procedures for entities such as partnerships and limited liability companies (LLCs). The section would allow the Department of Revenue (DOR) to expand audits beyond the legal entity being audited and limit the taxpayer’s appeal options, potentially forcing companies into expensive litigation of issues at the Appellate Tax Board that should be resolved at a more cost-effective administrative level.
Dempsey told State House New Service that the bill addresses many of the priorities Gov. Deval Patrick highlighted in his budget plan in “a balanced a fiscally responsible way.”
Posted by Christopher Geehern on Mon, Apr 15, 2013 @ 07:20 AM
The Massachusetts Senate approved a transportation funding bill Saturday that would dedicate approximately $800 million per year in new taxes and other revenue to roads, bridges and public transit by 2018.
The Senate measure is larger than the $500 million package approved on April 8 by the House of Representatives, but still well below Governor Deval Patrick’s original proposal to raise $1.9 billion annually for transportation and education by raising the income tax and corporate taxes. The governor praised the Senate bill on Saturday as a significant step toward a “safe, functional, modern transportation system to keep pace with a growing economy.”
Senators voted 30 to 5 to approve the same basic group of tax changes passed by the House - $110 million from increasing the gasoline tax 3 cents per gallon and then indexing the levy to inflation; $161 million from a tax on computer services; $110 million from tobacco taxes; and $83 million from changes to utility classification and sales sourcing.
The Senate bill adds revenue from several sources, including $40 million by requiring utility companies to pay for light poles and other structures on public rights of way, and $80 million by redirecting 2.5 cents per gallon from the gasoline tax currently earmarked for cleanup of underground storage tanks.
A conference committee will now hammer out differences between the two versions, but analysts expect the final measure to be closer to the Senate’s $800 million number. Governor Patrick had threatened to veto the House blueprint, but has not said directly whether he would sign a final bill with the Senate numbers.
Associated Industries of Massachusetts has maintained throughout the debate that lawmakers should fund transportation improvements with transportation-specific sources of revenue rather than business taxes such as the one on computer software. The association nevertheless believes that the legislation passed by the House and Senate takes positive steps toward fixing the transportation system without crippling increases to the income tax or other broad-based levies.
AIM also remains encouraged that both the House and Senate bills would require the MBTA and Department of Transportation to accelerate reasonable benchmarks for revenues, savings, and reforms. A menu of reforms approved in 2009 was supposed to generate $6.5 billion in savings over 20 years, but has so far reduced costs by just $500 million.
“Employers understand the need for Massachusetts to maintain a transportation infrastructure that supports economic growth. The Senate and House measures solve the immediate and long-term structural deficit of the state transportation system,” said John Regan, Executive Vice President of Government Affairs at AIM.
The increase in the gasoline tax would cause an average driver to pay an additional $12 to $30 per year to fill the tank. The Legislature said it did not want to rely solely on increasing the gas tax because gas consumption has declined in recent years and is expected to continue to fall.
The plan would provide “forward funding” for regional transit authorities in 2014 and allow the Department of Transportation to move all employees onto the operating budget by 2016, ending the current practice of paying for personnel with borrowed funds.
Information provided by the Legislature indicates that their proposal to apply the sales tax to software modifications and systems design does not impose taxes on cloud-based services such as remote data storage. Downloads of computer games, music and books would also remain outside the new sales tax.
Other elements of the Senate bill include:
- A provision directing the Department of Transportation (DOT) to move towards open road tolling on major routes other than the Turnpike.
- A commitment to transfer up to approximately $160 million per year from the general fund to the transportation fund in years beyond Fiscal 2018.
- A directive to the MBTA to pursue naming rights sales on its stations and other assets.
PriceWaterhouse Coopers Analysis of Business Taxes in Murray/DeLeo Plan
Ernst & Young Analysis of Tax on Computer Services
Posted by Andre Mayer on Fri, Apr 12, 2013 @ 10:06 AM
What do AIM members expect from the sequester?
The mandated reductions in federal spending, divided between defense and non-defense accounts, which took effect in March will of course be felt directly by some government contractors. Other employers may suffer some consequences as a result of reductions in certain services, such a federally-funded workforce development programs.
Many economists have been concerned about macroeconomic effects – a slowdown in overall growth because of reduced federal spending – although the prospective increase in tax rates, largely averted, was considered the more dangerous part of the 'fiscal cliff.' And a substantial body of opinion holds that the cuts won't hurt (or not much) in the short run, and will be beneficial in the longer term.
Member responses to a special question on AIM's March Business Confidence Survey indicate that the direct impact of the spending cuts is limited – only 3 percent of respondents cited direct effects (which they are already feeling). A plurality of respondents, 57 percent expected indirect negative effects; and 40 percent did not foresee negative effects from sequestration.
Responses from manufacturers and from employers in other sectors were virtually identical; but there were clear differences by size. All of the companies reporting direct impact were in the medium size range (the respondents did not happen to include large defense contractors or healthcare/research institutions). The small and medium-size groups otherwise responded similarly, with slightly more expecting negative effects than discounting them. Among larger employers, by contrast, more than three out of four (76 percent) expected negative indirect effects from the spending cuts.
These results are generally in line with past surveys showing small employers most concerned about government spending while larger ones are more likely to value government programs.
On this evidence, direct benefits (contracts) do not appear to be a major factor; but it is not clear to what extent the divergence is an effect of, for example, different tax situations, ability to access programs, or simply varying political and economic views. The balance of responses does hint at why fiscal issues, at least on the spending side, may be challenging for business organizations.
Posted by John Regan on Mon, Apr 08, 2013 @ 08:07 AM
The federal government will allow Massachusetts three years to phase in rules under the Affordable Care Act (ACA) that could increase insurance premiums for some small employers by 17 percent.
The U.S. Department of Health and Human Services (HHS) notified the commonwealth Friday that it could take extra time to eliminate rating factors designed to mitigate premium increases in the health insurance market that covers individuals and companies with 50 or fewer employees. The action satisfied Massachusetts officials, who previously indicated that they were “seriously considering” de-merging that market.
Associated Industries of Massachusetts commends the Patrick Administration for securing relief from the potential sticker shock of implementing the rating changes in 2014. At the same time, the extension represents a temporary solution rather than a permanent fix.
“We need to amend the ACA to allow us to keep the rating factors permanently,” said Kristen Lepore, Vice President of Government Affairs at AIM.
“We established most of these factors when we merged the individual and small group markets in 2007 to mitigate the effects on small employers. At the end of the day, when the transition is over, we will still have a merged market but no rating factors. That is not fair to small employers who have done the right thing over the past six years.”
The merged health insurance market uses the same rules to rate coverage for individuals and small companies. Limited premium differentials are currently permitted based upon group size and other factors, but will no longer be permitted under the ACA. The merged market is due to expand in 2016 to include employers with 100 or fewer workers.
Elimination of rating factors in the merged health insurance market is just one of several elements of federal health care reform that threaten to increase premiums for Bay State employers and consumers. A separate health care premium tax, for example, is projected to cost Massachusetts insurance purchasers $213 million in 2014 and $3 billion during the next decade.
State Insurance Commissioner Joseph Murphy, said the extension on eliminating rating factors will benefit both individual consumers and employers.
“This is good news for small businesses and individual insurance consumers all across the commonwealth,” Murphy said in a statement. “We thank HHS for acknowledging the work of the commonwealth in providing health insurance to our residents prior to the Affordable Care Act.”
Posted by Christopher Geehern on Mon, Apr 08, 2013 @ 06:31 AM
Senate President Therese Murray and House Speaker Robert DeLeo last week announced a proposal that would increase gasoline, tobacco and certain business taxes to close an operational deficit in the Massachusetts transportation system that is set to reach $548 million by Fiscal Year 2018.
The legislative plan would generate $110 million by increasing the gasoline tax 3 cents per gallon and then indexing the levy to inflation. It also raises $161 million from a tax on computer services, $110 million from tobacco taxes and $83 million from changes to utility classification and sales sourcing.
The measure is more focused than Governor Deval Patrick’s earlier plan to spend more than $1.9 billion a year on transportation and education. The governor sought to increase the income tax from 5.25 to 6.25 percent, eliminate 44 personal exemptions and deductions, reduce the sales tax from 6.25 to 4.5 percent and raise corporate taxes by $500 million annually.
John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts, said employers are encouraged that the Murray/DeLeo proposal requires both the MBTA and Department of Transportation to meet reasonable benchmarks for revenues, savings, and reforms.
“Although we would have preferred that the plan rely more heavily on transportation-specific sources of revenue, we nevertheless believe that the proposal announced by Senate President Murray and Speaker DeLeo takes a meaningful step in the right direction by solving the immediate and long-term structural deficit of the state transportation system.” Regan said.
The increase in the gasoline tax would cause an average driver to pay an additional $12 to $30 per year to fill the tank. The Legislature said it did not want to rely solely on increasing the gas tax because gas consumption has declined in recent years and is expected to continue to fall.
The plan would provide “forward funding” for regional transit authorities in 2014 and allow the Department of Transportation to move all employees onto the operating budget by 2016, ending the current practice of paying for personnel with borrowed funds.
Information provided by the Legislature indicates that their proposal to apply the sales tax to software modifications and systems design does not impose taxes on cloud-based services such as remote data storage. Downloads of computer games, music and books would also remain outside the new sales tax.
PriceWaterhouse Coopers Analysis of Business Taxes in Murray/DeLeo Plan
Ernst & Young Analysis of Tax on Computer Services
Richard C. Lord, President and Chief Executive Officer of AIM, commended the Legislature for its proposal and Governor Patrick for initiating a serious and thorough discussion of state spending priorities.
The full House is scheduled to debate the plan later today. Although AIM would have liked to see more reliance on transportation-related revenues and less on increased business taxes, we believe this plan represents a reasonable approach in the midst of a less than robust economic recovery and we encourage the members of the House to support it.
Posted by Kristen Lepore on Tue, Apr 02, 2013 @ 08:14 AM
Federal officials have given Massachusetts until Friday to decide whether to separate the individual and small-group health insurance markets as the commonwealth seeks flexibility to head off premium increases under federal health reform.
State officials say they are “seriously considering” de-merging the health insurance market covering both individuals and companies with 50 or fewer employees. Massachusetts combined those markets in 2007 as part of its own health care reform effort, but the commonwealth may reverse course because the national Affordable Care Act (ACA) will require the state to eliminate rating factors designed to mitigate premium increases for small business.
Massachusetts officials asked the U.S. Department of Health and Human Services late last year for a waiver from the ACA-prescribed rating rules in cases where rating factors advance a state’s sound public policy. De-merging would be an alternative to obtaining a waiver.
A third party analysis conducted for the state estimates that changes to the rating factors could increase costs as much as 17 percent. A separate health care premium tax included in the ACA will raise costs even more. The levy would cost employers and consumers in Massachusetts $213 million in 2014 and $3 billion during the next decade.
“Associated Industries of Massachusetts supports efforts by the Patrick Administration to obtain from the federal government the flexibility we need to preserve the progress of the 2006 Massachusetts health care reform. There is no legitimate public policy reason to disrupt the work we have done over the past seven years,” said Richard C. Lord, President and Chief Executive Officer of AIM.
“A waiver would be preferable to unlinking the merged market but if we are not afforded this flexibility then de-merging the market is the next best solution.”
The merged health insurance market uses the same rules to rate coverage for individuals and for small companies. Limited premium differentials are currently permitted based upon group size, but will no longer be permitted under the ACA.
Massachusetts Insurance Commissioner Joseph Murphy, in a letter Friday to the U.S. Centers for Medicare and Medicaid Services, calls the merged market a “cornerstone” of the state health reform law.
“We have, however, communicated to (Department of Health and Human Services) staff that given the changing landscape of health care reform across the nation and how those changes may affect our current needs to successfully implement the ACA in Massachusetts, we need to re-evaluate our approach of merging the individual and small group health insurance markets,” Murphy wrote.