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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

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

Attorney General: Massachusetts Well-Positioned on Health and Energy

Posted by Christopher Geehern on Nov 17, 2016 11:35:50 AM

The approach that Massachusetts takes to key employer issues such as health care and energy will depend heavily on decisions that will be made during the next several months by the Trump Administration, Attorney General Maura Healey said this morning.


The good news, Healey told several hundred business leaders at the AIM Executive Forum, is that Massachusetts is prepared for such uncertainty because of the collaborative policy work that has been done by several governors, the legislature, the attorney general’s office and the private sector.

She pointed to the fact that Massachusetts has its own health-care reform law that will remain even if President Trump and Congress change some or all of the Affordable Care Act. She also noted that the Legislature passed a wide-ranging energy bill earlier this year to diversify the commonwealth’s energy supply.

“I would love to have the Massachusetts way to be the American way,” Healey said.

The attorney general opened her remarks with several observations on the presidential election and her decision to establish a hotline for people to report incidents of bias or harassment. She reported that more than 200 people from all sides of the political spectrum have called the hotline in the past two days.

“It sends a message that we know the difference between right and wrong,” Healey said.

She acknowledged that the degree to which the Trump Administration changes Medicaid funding levels - and potentially shifts that funding to block grants - will have a significant effect on the Massachusetts health-care system. The attorney general’s office has issues multiple reports looking at rising health-care costs in Massachusetts and methods to improve the market.

“Regardless of federal changes, the legal framework Massachusetts put in place under Governor Romney, that served as the model for the ACA, remains. So, in key ways, I believe we are strongly positioned to keep our health care systems running smoothly. But we need everyone at the table and working together.

“While we get ready to respond to changes at the federal level, we will continue to work on our affordability agenda here at the state level. And there’s plenty to do on this front.”

Energy policy will also depend on the direction of a president who campaigned on the need to exploit coal and other traditional fuels to control the cost of electricity. Healey said the new Massachusetts energy law commits the commonwealth to diversifying its energy portfolio through a competitive market.

“I believe diversification of our energy sources is critical,” she said.

“The role for my office is to make sure that we have a competitive, transparent process that results in cost-effective contracts and minimize customer risk.”

Healey said the trend of collaboration between employers and her office continued earlier this year with passage of the nation’s first pay-equity law. AIM worked with Healey and legislative leaders on a compromise bill that ensures fair compensation for all workers while allowing employers to attract and retain skilled employees.

Topics: Health Care Reform, Energy, Maura Healey, Attorney General Maura Healey

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
    efficiency.
  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

Government Postpones Health-Reform Reporting Deadlines

Posted by Russ Sullivan on Jan 4, 2016 7:00:00 AM

The federal government has extended the February 1 deadline for employers to provide eligibility and other information to workers under federal health care reform. The extension is good news for employers struggling to implement the complex reporting regulations of the Affordable Care Act (ACA).

The Internal Revenue Service announced on December 28 that it will extend by two months the deadline by which employers must provide detailed form 1095-C to each employee who had an offer of insurance in 2015 or worked 130 hours in any month during 2015. Employers now have until March 31, 2016 to file forms 1095-B (self-insured plans) or 1095-C to employees.

Filings to the IRS have also been extended by three months.  Whereas employers had to transmit their information to the IRS by February 28 (March 31 if filing electronically), employers now have until May 31 to file with the IRS (June 30 if filing electronically).

Under ACA regulations, the 1095-C form requires extensive review of multiple factors such as prior year W-2 earnings, enrollment or waiver of health insurance, eligibility periods and pay rates and hours worked annually and month to month for each employee on the employer’s payroll.  

The IRS had previously allowed employers to request two 30-day extensions of the filing deadlines before extending the deadlines for everyone.

The revised filing deadlines are outlined below.

ACAChart.jpg

Topics: Health Care Reform, Health Care Costs, Massachusetts employers

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

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

Companies with 51-100 Employees Get Transition Period for Health Insurance Changes

Posted by Katie Holahan on Aug 13, 2015 6:02:00 PM

Massachusetts employers received good news on health insurance costs this afternoon as the Baker administration announced a 10-month transition period before federal health reform reclassifies companies with between 51 and 100 employees in a manner that will in many cases raise premiums.

20-Price-of-pills1The transition period will allow companies with 51-100 workers to buy insurance under current rating system until October 1, 2016, instead of the January 1, 2016 established by the federal Affordable Care Act (ACA). The ACA requires that Massachusetts extend its individual/small group health insurance market (normally for businesses 1-50) to businesses with up to 100 employees, a move that will completely change the way rates are established and affect both premiums and market volatility.  

Massachusetts will be the 35th state to invoke such a transition period. The action does not require permission from the federal government.

"I am pleased to announce that this guidance will help mitigate substantial premium increases for many Massachusetts residents," Baker said in a statement. "Allowing employers with 51-100 employees to remain in the large group market will retain a level of rate predictability and plan flexibility for both employers and their employees."

Announcement of the large-group transition period comes two months after the U.S. Department of Health and Human Services granted Massachusetts relief on another issue by giving an additional year to use existing health-insurance rating factors that are otherwise prohibited under the Affordable Care Act (ACA).  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.

“The Baker administration has taken a significant and positive step toward helping the small- and medium-sized employers that form the backbone of the Massachusetts economy avoid volatility in the health-insurance market” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.

He added, however, that AIM is still calling upon the federal government to grant Massachusetts’ request for a permanent waiver from the requirement to place companies of 51-100 people into the merged market.

“Massachusetts has its own version of health reform that is working well and we see no reason to disrupt it,” Regan said.

Moving the 51-100 employee companies into the individual/small group “merged” market is significant because the businesses would no longer carry their own experience rating. They would instead be rated as a group with other individuals and small companies that often have more volatile health insurance claims patterns.

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

Small Business Gets a Breather on Health Insurance

Posted by Katie Holahan on Jun 17, 2015 11:11:00 AM

Small businesses in Massachusetts won some breathing room yesterday from a provision of federal health care reform that threatens to raise insurance premiums for some companies by more than 50 percent.

health_careThe U.S. Department of Health and Human Services granted Massachusetts a waiver that will allow the commonwealth an additional year to use existing health-insurance rating factors that are otherwise prohibited under the Affordable Care Act (ACA).  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.

Among the factors to be eliminated in pricing health insurance for companies with fewer than 50 employees are industry, participation rate, group size, intermediary discount and group purchasing cooperatives.

The waiver extends the commonwealth’s current transition period first granted in 2013 and extended in 2014, allowing small-group market insurers to continue using two-thirds of current ratings factors through January 1, 2017, after which the ratings factors will be reduced to one third, before being phased out entirely on January 1, 2018.

The postponement came in response to a May 27 request from Governor Charlie Baker to U.S. Health and Human Services Secretary Silvia Matthews Burwell. The federal government did not respond to a second request by the governor to postpone a separate requirement that Massachusetts expand its small-group health-insurance market next year from companies with 1-50 employees to those with 1-100 employees.

“Protecting small businesses from massive insurance rate hikes is essential to making sure job creators continue to thrive here and I am grateful the Obama administration granted Massachusetts this flexibility,” Baker said.

A study by health insurance companies indicates that the rating changes could raise or lower rates for small companies by up to 57 percent.

The biggest fluctuation in terms of cost will stem from the change in the size factor. Currently, larger businesses benefit from the size factor, with smaller businesses paying more; so when that factor is limited, the larger businesses will see an increase in cost. Elimination of the wellness program participation factor is also expected increase relative premiums for groups with healthier populations.

Associated Industries of Massachusetts strongly supports Baker’s efforts to maintain portions of the successful 2006 Massachusetts health-care reform.

“The Baker Administration deserves tremendous credit for aggressively seeking a waiver to help small businesses in Massachusetts,” said John Regan, Executive Vice President of Government Affairs at AIM.

“But delay does not equal resolution.  Massachusetts needs a permanent waiver from the rating-factor changes of federal reform because it’s wrong to penalize employers in the one state that led the nation on health-care reform.” 

Massachusetts insured a majority of its residents under healthcare reform in 2006, establishing a state marketplace that merged small group and individual insurance markets. The ratings factors served as a protection for small employers who took on risks from the individual insurance market.

Topics: Health Care Reform, Health Care Costs, Charlie Baker

Governor Seeks to Head Off Premium Shock from Federal Health Reform

Posted by Katie Holahan on May 1, 2015 11:17:18 AM

Governor Charlie Baker is seeking to preserve several key elements of the Massachusetts health-insurance market rather than implement provisions of the Affordable Care Act (ACA) that could raise premiums for some small Bay State employers by more than 50 percent.

health_careThe governor, in a letter Monday to U.S. Health and Human Services Secretary Sylvia Matthews Burwell, asks the federal government to postpone the requirement that Massachusetts expand its small-group health-insurance market next year from companies with 1-50 employees to those with 1-100 employees.

Baker also seeks permission for Massachusetts to use its current group of rating factors to price health insurance for small businesses. The commonwealth 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.

The governor says in his letter to Burwell that “there continues to be significant concern about the impact the ACA market rules will have on the Massachusetts market.”

“Decreased use of the rating factors has already led to significant premium swings that have disproportionately affected small businesses,” Baker writes.

“The eventual elimination of the rating factors, as well as the restriction limiting insurers to file their rates on an annual basis, will lead to further disruption and instability in the marketplace.”

Former Health and Human Services Secretary Kathleen Sebelius rejected a request from then-Governor Deval Patrick in September 2013 for a waiver from the same provisions of federal health reform. Rejection of the waiver came despite last-minute letters of support to Sebelius from U.S. Representatives Michael Capuano, Stephen Lynch and William Keating.

Associated Industries of Massachusetts strongly supports Baker’s request to maintain portions of the successful 2006 Massachusetts health-care reform.

“Imposition of new definitions of the small-group market and elimination of rating factors introduces needless uncertainty into the market for health insurance. Why disrupt a system that works here in Massachusetts where 97 percent of people have health insurance?” said John Regan, Executive Vice President of Government Affairs at AIM.

Massachusetts has begun a four-year transition period under which the value of the rating factors that will eventually disappear slowly decreases:

  • For plan years beginning on or after January 1, 2014 but before January 1, 2016:  Two-thirds of the level of the value of the disallowed factors may be used;
  • For plan years beginning on or after January 1, 2016 but before January 1, 2017: One-third of the level of the value of the disallowed factors may be used;
  • For plan years beginning on or after January 1, 2017, issuers must be in full compliance with federal rating rules.

The decrease in (and eventual elimination of) certain rating factors could result in premium rate changes for certain groups. The biggest fluctuation in terms of cost will stem from the change in the size factor. Currently, larger businesses benefit from the size factor, with smaller businesses paying more; so when that factor is limited, the larger businesses will see an increase in cost.

Elimination of the wellness program participation factor is also expected increase relative premiums for groups with healthier populations.

Topics: Health Care Reform, Health Care Costs, Charlie Baker

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