Katie Holahan

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Employers: Federal Health Reform Must Change

Posted by Katie Holahan on Feb 8, 2017 10:00:00 AM

Massachusetts employers believe overwhelmingly that federal health-care reform must change, but their opinions about how to do so vary widely.

Health_Care_Reform.jpgA new AIM survey finds that 43 percent of Bay State employers think that Congress and President Donald Trump should make changes to the existing Affordable Care Act, or Obamacare. Forty percent favor repealing the law and replacing it with an alternative program.

Eleven percent want to leave the current system in place while seven percent would repeal the reform law without an alternative.

The president and the Republican-controlled Congress have made “repeal and replace” a centerpiece of their governing priorities for the first 100 days. Republicans have yet to agree upon an alternative, but appear to favor eliminating the tax penalties imposed on people who go without insurance and on larger employers who do not offer coverage to employees.

The AIM survey was taken in January and is based upon responses from 162 employers from all sectors of the Massachusetts economy.

“The paperwork for Obamacare is ridiculous and terrifying for the regular person,” wrote one employer.

“We used to get one bill and now you get a bill from each doctor and have to wait for explanation of benefits and pre-register for everything. They have made health care so many layers it's no wonder the prices are through the roof.”

Another employer echoed that frustration.

“Trying to make changes to a 2,700-page bill with over 40,000 pages of accompanying regulations is bizarre. Start over,” the employer wrote.

Richard C. Lord, President and Chief Executive Officer of AIM, said employers supported the 2006 Massachusetts health-care reform as a first step to controlling the cost of providing health insurance to workers. Federal reform caused upheaval for many small employers in Massachusetts, but Lord also warns that an ill-considered repeal might put at risk billions of dollars in federal Medicaid funding that made the Bay State reform so successful.

“The expansion of Medicaid is exerting significant financial pressure on the state budget. Our hope is that policymakers in Washington can agree on some common-sense tweaks to Obamacare that would work to everyone’s benefit.”

Republican leaders formulating a replacement health reform have talked about eliminating tens of billions of dollars provided each year to states that have expanded eligibility for Medicaid. They have also discussed repealing subsidies for private health insurance coverage obtained through the public marketplaces known as exchanges.

The 2010 federal reform imposed taxes and fees on certain high-income people and on health insurers and manufacturers of brand-name prescription drugs and medical devices, among others. Republicans have not said for sure which taxes they will scrap and which they may keep.

The policy debate in playing out amid growing signs of accelerating health-insurance premium costs.

“My insurance premiums increased 24 percent this year. That is a little excessive,” one employer wrote.

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

Infographic: The Governor's Proposed Health Assessment

Posted by Katie Holahan on Jan 25, 2017 4:21:34 PM

The Baker Administration filed a budget proposal today that, as expected, would impose a $2,000-per-employee tax on some employers to close a deficit in MassHealth. AIM opposes the assessment as unfairly burdening employers for a problem they did not create.

Which employers will be subject to the assessment? Here is an infographic that summarizes the administration proposal. AIM is developing a calculator that will allow employers to determine exactly what their costs will be under the new assessment.

If you have any feedback or questions about this proposal, please contact Katie Holahan at or 617.262.1180.

Fair Share 2017.jpg


Topics: Health Care Costs, Health Insurance, Charlie Baker

Proposal to Revive Fair-Share Assessment Raises Concerns

Posted by Katie Holahan on Jan 17, 2017 8:17:07 AM

The 4,000 member employers of Associated Industries of Massachusetts (AIM) believe that the Baker Administration’s proposal to impose a $2,000-per-employee tax on some employers is an unfair way to close a deficit in MassHealth.

health_care.jpgThe proposal would force employers to foot the bill for a problem they did not create. The $600 million shortfall at Masshealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable solely to problems arising from the federal Affordable Care Act, a law that may well be repealed by the time Massachusetts solves its Medicaid problems 

AIM acknowledges that the ACA-generated deficit at MassHealth is not the creation or responsibility of the Baker Administration.

The Affordable Care Act (ACA) made access to health insurance an entitlement based on expanded income eligibility.  Under the Massachusetts health care reform law of 2006, employees who were offered employer-sponsored health insurance were ineligible for MassHealth.  The ACA reversed that policy and allowed employees to decline employer coverage and still seek insurance through MassHealth.

The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden.  ACA made it an economically rational choice for eligible residents.

As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years - the high cost of health care coverage in this state threatens the underpinnings of the state economy.  This challenging moment underscores the fact that policymakers have concentrated too heavily on access issues instead of controlling the cost of health insurance, and now face a renewed imperative to lower costs for everyone in Massachusetts.

State House News Service reports that the administration plan would impose a $2,000 fee for all full-time workers - defined as someone who works 35 hours or more - upon businesses that don't cover at least 80 percent of their workers and share at least 60 percent of the premium cost with employees.

The employer assessment, which would bring an estimated $300 million into state coffers, represents a revival of the so-called fair share contribution plan that was a linchpin of the 2006 universal health care law in Massachusetts before it was repealed to make way for the federal Affordable Care Act. The state employer mandate was repealed in 2013 as lawmakers and former Gov. Deval Patrick worked to bring Massachusetts into compliance with the ACA.

There are positive elements to the administration’s proposal as well. AIM supports a freeze on new mandated health-insurance benefits and a cap on provider rates.

AIM recognizes that the administration’s proposal is the opening bid in what will be a protracted debate. We look forward to productive discussions with the administration and the Legislature to find a solution that does not wreak irreparable harm on the Massachusetts economy.

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

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 Rising Cost of Health Care

Posted by Katie Holahan on Dec 17, 2015 1:27:03 PM

The Massachusetts Health Policy Commission this week released its 2015 Cost Trends Report examining the cost of health care and health insurance in the commonwealth. Per-person spending on health care grew at less than the 3.6 percent overall economic growth rate, though overall spending grew at 4.8 percent. The bottom line is that health care spending continues to divert precious resources from employers, families and state government.

Graphics are courtesy of the Health Policy Commission.





Topics: Health Care Costs, Health Care, Benefits

Lord Re-Appointed to Health Cost Control Commission

Posted by Katie Holahan on Dec 10, 2015 12:01:59 PM

Associated Industries of Massachusetts President Richard C. Lord has been re-appointed to a five-year term on the board of a commission charged with moderating health insurance costs in Massachusetts.

aim_centennial_fm-1942-2.jpgLord was re-appointed to the 11-member Massachusetts Health Policy Commission board by State Auditor Suzanne Bump. Also re-appointed for five years was Harvard University Economics Professor David Cutler. Former gubernatorial candidate and former Medicare and Medicaid Director Donald Berwick will also join the group under an appointment by Attorney General Maura Healey.

The Health Policy Commission is an independent state agency that develops policy to reduce health-care cost growth and improve the quality of patient care. Created under the state health-cost control law of 2012, the HPC is responsible for monitoring the performance of the health care system, analyzing the impact of health care market transactions and ensuring that health-care costs rise no faster than the overall rate of state economic growth.

“The Health Policy Commission works on the front lines of the battle to make health-insurance costs affordable for employers and their workers,” Lord said.

“It’s a privilege to represent hard-working employers in this important work.”

The commission has recently been reviewing a 4.8 percent surge in total health-care expenditures during 2014, an increase that exceeds both the 2.4 percent increase for 2013 and the 3.6 percent cost benchmark. Massachusetts patients spent $54 billion - that's $8,010 per person – on medical care last year while employers continued to pay some of the highest health-insurance premiums in the country.

The commission heard from health-care experts, elected officials and employers during three days of hearings in October focused on identifying strategies to limit cost increases and improve quality.

AIM-member employers often cite the cost of providing health insurance to workers as one of their primary concerns about doing business in the commonwealth. The issue is among four major iniatives included in AIM's Blueprint for the Next Century long-term economic plan for Massachusetts.

Stuart Altman, Professor of National Health Policy at The Heller School for Social Policy and Management at Brandeis University, chairs the Health Policy Commission board. Other members in addition to Lord, Cutler and Berwick include Wendy Everett, President of NEHI, a national health policy research institute; Carole Allen, a retired pediatrician from Arlington; Martin D. Cohen, president/CEO of the MetroWest Health Foundation; Secretary of Administration and Finance Kristen Lepore; Ron Mastrogiovanni, President and Chief Executive Officer of HealthView Services; Secretary of Health and Human Services Marylou Sudders; Veronica Turner is the Executive Vice President of 1199SEIU.

Lord is widely acknowledged as an expert on the impact of health-insurance costs on employers. He serves on the boards of the Massachusetts Health Quality Partners and the Massachusetts Health Council and is a former board member of the Commonwealth Health Insurance Connector Authority.



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Topics: Health Care Costs, Richard Lord, Business Costs

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

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

Health Spending Surpasses Benchmark

Posted by Katie Holahan on Sep 2, 2015 7:10:00 AM

Health-care spending growth in Massachusetts surged past the commonwealth’s cost-control benchmark in 2014 as the MassHealth program for the poor spent billions to care for people left without coverage by problems at the Health Connector.

MassMedSpending2015The Massachusetts Center for Health Information and Analysis (CHIA) will today report that total health-care expenditures rose 4.8 percent in the Bay State last year. The increase far exceeds both the 2.4 percent increase for 2013 and the 3.6 percent benchmark for 2014 established under the state health cost-control law, which seeks to limit increases in health spending to the overall economic growth rate.

Total medical spending among commercial payers rose a more modest 2.9 percent. Health-insurance premiums for fully insured employers increased at the inflation rate of 1.6 percent, while premiums for self-insured companies jumped 3.4 percent.

Massachusetts patients spent $54 billion - that's $8,010 per person – on medical care last year, according to the CHIA report. Massachusetts employers, meanwhile still pay some of the highest health-insurance premiums in the country.

The overall 4.8 percent growth rate allows the Massachusetts Health Policy Commission (HPC) to require performance improvement plans from doctors, hospitals or insurers that “threaten the Commonwealth’s ability to meet the benchmark.” The commission will make final decisions on requiring any performance improvement plans during the next several weeks.

Richard C. Lord, President and CEO of Associated Industries of Massachusetts, serves as a member of the Health Policy Commission. 

The report was the second indication in as many weeks that the health insurance premium costs paid by employers may be accelerating after several years of moderate increases. The Massachusetts Division of Insurance last month approved premium increases averaging 6.3 percent for the first quarter of 2016 for companies with 1 to 50 employees - more than double the 3.1 percent average increase that small business saw in the first quarter of this year.

Health spending nationally is projected to grow from about 17 percent of US economic output in 2013 to nearly 20 percent in 2024, according to federal government estimates.

“The spending increases in the commercial sector were modest, but the cost of health insurance remains a key challenge for Massachusetts employers,” said John Regan, Executive Vice President of Government Affairs at AIM.

“We remain concerned about the acceleration of costs in the next several years."

MassHealth spending grew 19 percent, or $2.4 billion, last year as enrollment increased 23 percent. Persistent problems with the Health Connector in 2014 led to more than 325,000 residents being enrolled in a “transitional” MassHealth program without the normally required eligibility determinations.

Spending increases in the commercial sector were driven by rising pharmaceutical expenditures. The CHIA report says that pharmacy spending grew at 12.5 percent for commercial full-claim and 14.4 percent for MassHealth.

Topics: Health Care Costs, Health Insurance

Health Premiums Surge for Small Companies

Posted by Katie Holahan on Aug 31, 2015 9:06:19 AM

Health insurance premium increases appear to be accelerating for small employers in Massachusetts after several years of relative price stability.

Health.EnergyThe 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.

The increases will affect an estimated 300,000 people who buy insurance in the so-called merged market that includes both individuals and small companies.

Insurers blame the accelerating costs on a rise in the number of people using expensive drugs and expensive medical services, along with new costs imposed by federal health care reform. That same reform act is threatening to throw even more volatility at small employers in the coming months as the Affordable Care Act forces employers with 51-100 employees into the merged market and reduces the factors used to price insurance from 11 to four.

“The rate increases are a matter of concern for employers to the degree that they are harbingers of broader health-insurance cost increases,” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.

“They are also a concern because of the unwarranted changes that federal health may impose soon upon the small employers that form the backbone of the Massachusetts economy.”

One strategy for employers, Regan said, is to explore the new generation of moderately priced tiered insurance products that provide employees a financial incentive for obtaining care from high-quality community doctors rather than at academic medical centers. Tiered products are avilable in some, but not all areas of the commonwealth.

Many employers are also turning to high-deductable plans coupled with Health Savings Accounts in an effort to encourage workers to shop for health care, Regan said.

Insurance-premium increases for small employers rose 1.9 percent during 2014 as the Patrick administration continued a policy of artificially restricting the market by directing the Division of Insurance to reject all rates above a certain threshold increase. This non-market decision making may be a contributing factor to the current rate increase.

Health spending nationally is projected to grow from about 17 percent of US economic output in 2013 to nearly 20 percent in 2024, according to federal government estimates.

The good news for small businesses with 51-100 employees is that the Baker administration announced several weeks ago a 10-month transition period before federal health reform reclassifies those companies into the merged market.  The U.S. Department of Health and Human Services granted Massachusetts relief on another issue as well by giving an additional year to use existing health-insurance rating factors that are otherwise prohibited under the Affordable Care Act (ACA).  

Separately, state officials are due to issue on Wednesday their annual an annual calculation of the year’s increase in Total Health Care Expenditures (THCE). If the growth in expenditures exceeds the current benchmark of 3.6 percent, the state Health Policy Commission (HPC) will develop performance-improvement plans for doctors, hospitals and insurers that threaten the Commonwealth’s ability to meet the cost growth benchmark.

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

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