It’s time to fix federal health care reform.
Associated Industries of Massachusetts (AIM) and its 5,000 member employers supported the groundbreaking 2006 Massachusetts health reform as a necessary step toward repairing a health-care system that had been choking the life out of the economy for decades. We were joined in that effort by a unique coalition of employers, doctors, hospitals, insurance companies, consumers and political figures, including both a Republican and Democratic governor.
We undertook an exhaustive educational effort to ensure that every Massachusetts employer, from multinational financial institutions in Boston to restaurants in North Adams, understood their shared responsibilities under an enormously complex law.
The Massachusetts reform initially experienced many of the same challenges that now mark the federal Affordable Care Act (ACA). Those of us who made up the coalition of unlikely partners (so sorely missing from the ACA framework) endured plenty of disagreements and table pounding , but Massachusetts ultimately persevered and accomplished much of what the ACA is now asking the 49 other states to do.
The percentage of Massachusetts residents without health insurance has dropped from 8 percent before reform to a best-in-the-nation 2 percent today. Employers have stepped up as well, with 77 percent offering health insurance to employees versus 70 percent in 2005.
And Massachusetts is again moving ahead of the rest of the country to tackle the unfinished business of ensuring that its world-class health care system is affordable for employers and individuals alike. The Legislature last year approved, and Governor Deval Patrick signed, a health-cost control law that will limit increases in medical spending to the overall economic growth rate in Massachusetts – 3.6 percent this year.
Although we were pleased to be model for rest of the country, it is discouraging to realize that key provisions of the ACA that were supposed to dovetail with the Massachusetts reform law instead threaten to accelerate the already burdensome cost of health insurance for employers, citizens and a commonwealth that spends nearly half its budget on health care.
- A third-party analysis conducted for the state estimates that a health-care premium tax included in the ACA will cost employers and consumers in Massachusetts $213 million in 2014 and $3 billion during the next decade.
- A provision reducing rating factors used in the combined individual/small business market could increase health-insurance premiums for 60 percent of small companies, according to a Pioneer Institute analysis of Division of Insurance data. Pioneer says that 181,000 small employers could see premiums rise by more than 10 percent and that 45,757 will see increases of more than 30 percent.
- ACA will shift employers with between 51 and 100 employees into the merged health insurance market in 2016, resulting in a small decrease in premiums for employers with 1-50 employees but an increase up to 9 percent for employers with 51-100 employees.
- ACA rules require states like Massachusetts that merged their individual and small-group health insurance markets to set rates only once a year instead of the current quarterly time frame. Massachusetts employers and consumers have recently benefitted from rate filings that declined from one quarter to the next.
- Although ACA is expected to prompt state lawmakers to eliminate two key employer contribution requirements - the Fair Share contribution created under the 2006 state reform law; and the Medical Security Program, under which employers contribute money to provide low-income unemployed people with health insurance – the state is likely to add an “employer responsibility contribution” of $50 per employee per year to subsidize unemployed people obtaining health insurance either though MassHealth or the Commonwealth Health Insurance Connector.
- A 2.3 percent tax on medical devices that took effect January 1 as part of federal reform will cost one of the commonwealth’s fastest growing industries $411 million a year, according to the Pioneer Institute. The U.S. Senate took a non-binding vote in March to repeal the tax, but Health and Human Services Secretary Kathleen Sebelius told Congress on June 7 that the administration will not support repeal.
The curable ills of ACA extend beyond employers to the very consumers most helped by the 2006 Massachusetts reform. The Boston Globe reported recently that Massachusetts is scrambling to correct a glitch in the federal reform law under which eligibility for insurance premium subsidies is measured against the cost of an individual, rather than a family plan – a snafu that could leave an estimated four million Americans unable to afford coverage.
We’re left to wonder why Massachusetts stands to be penalized for having successfully figured out health reform during the past seven years. We feel like the one good kid in the class who gets detention because everyone else is talking.
AIM’s concerns about ACA do not diminish our support for the mission of both state and federal health reform to make health insurance more affordable and accessible to Americans. We refuse to be drawn into the rancorous national debate about the fundamental wisdom of health care reform or whether the measure should be repealed or otherwise discarded. Our concerns about ACA are practical, not political.
The ongoing national partisan maelstrom makes solving employer concerns about ACA challenging at best. Washington remains in a state of paralysis on the issue as the White House and Congressional Democrats are loath to open up health reform to mid-course corrections for fear that Republicans opposed to the measure will use the opportunity to kill it.
With no legislative fix on the horizon, the only workable solution is a waiver or regulatory flexibility from certain provisions of federal health-care reform to allow Massachusetts to maintain its current reform structure. AIM appreciates the efforts of the Patrick administration, which recently secured a two-year phase-in for the changes to insurance rating factors and annual rate filings, but that temporary latitude falls short of what Massachusetts needs to preserve the hard-won advances it made through hours and days of face-to-face negotiation in 2006.
AIM therefore calls upon the U.S. Department of Health and Human Services to grant Massachusetts a permanent waiver from those provisions of ACA that threaten to undo the laudable progress our commonwealth has made to control health costs for employers and consumers. We also ask our Congressional delegation to take up the cause of a permanent waiver with HHS.
If the federal government found the authority to grant a temporary waiver, then it can grant us a permanent waiver. If there is no waiver, we must amend the law to exempt Massachusetts. The temporary waiver is not a permanent fix and no one should be under the illusion that it is.
As the Globe noted in an editorial in March: “The Obama administration needs to pay special attention here. Imposing one-size-fits-all regulations on a state that already has universal health care and is leading the way on cost containment is counterproductive to say the least.”
In the meantime, AIM remains committed to helping employers understand their responsibilities under ACA as it takes full effect in 2014. The association has developed another comprehensive educational initiative that includes everything from joint seminars with the Massachusetts Health Insurance Connector Authority to multi-session ACA workshops to our popular Health Care Fridays Webinar series.
AIM remains proud of the leadership role played by the business community in Massachusetts’ unprecedented efforts to create an affordable, accountable world-class health care system. We would very much like the Affordable Care Act to live up to its name.