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Eileen McAnneny

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Research and Development Tax Credit Important to Massachusetts

Posted by Eileen McAnneny on Sep 22, 2011 11:41:00 AM

A bipartisan group of United States Senators on Monday unveiled a proposal to strengthen and make permanent the federal research and development tax credit before it expires at the end of the year.

Research and Development Tax CreditAnalysts project that increasing the alternative simplified R&D credit from the current 14 percent to 20 percent would spur the creation of 162,000 technology based jobs in the short term and thousands of additional jobs over the long term. Associated Industries of Massachusetts supports the increase because research and technology remains a key driver of the Bay State economy.

Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Republican member Orin Hatch (R-UT) formally introduced the Greater Research Opportunities Tax Help (GROWTH) Act of 2011 at a hearing on Tuesday. Massachusetts Senator John F. Kerry and seven other senators co-sponsored the measure.

“In the1980s the U.S. offered the best research and development incentive in the world. Today, the U.S. credit lags behind incentives offered by many developed countries and that credit has lapsed 14 times,” said Eileen McAnneny, Senior Vice President of Government Affairs at AIM.

“One of the reasons that the Massachusetts economy has out-performed the rest of the nation is a prevalence of research and innovation. Strengthening the R&D credit is therefore a key issue for Massachusetts.”

A new report by Ernst & Young indicates that the R&D credit has a significant impact on private spending:

  • The existing credit is estimated to have increased annual private research spending by $10 billion in the short-term and by $22 billion in the long-term (beyond the first several years), substantially higher than the credit’s roughly $6 billion to $8 billion annual revenue cost.
  • Increasing the simplified credit from 14 percent to 20 percent is estimated to increase annual private research spending by an additional $5 billion in the short-term and an additional $11 billion in the long-term.
  • In total, the overall policy – the existing credit plus strengthening the alternative simplified credit – is estimated to increase annual private research spending by $15 billion in the short-term and $33 billion in the long-term.

Tax-News.com reports that under current law, the R&D provision may be calculated under two methods: a traditional credit and the alternative simplified credit, both of which provide US firms a tax credit for incremental qualifying research expenses, such as labor and equipment costs. The GROWTH bill would simplify and update the research credit by significantly raising the value of the alternative simplified credit from 14 percent to 20 percent of average qualifying research expenses, and by allowing the traditional credit to expire at the end of 2011.

The R&D tax credit was originally enacted in 1981 and has provided an important incentive for private sector investment in innovative research by companies of all sizes and in a variety of industries. But many foreign competitors have instituted more generous R&D incentives in recent years, leaving the United States ranked 24th in research incentives among industrialized countries.

The temporary nature of U.S. R&D incentives is a strain on U.S. companies, causing uncertainty that negatively influences future company R&D budgets. Providing the certainty of a permanent credit, especially in a tax reform environment, is critical to maintaining U.S. leadership in global advanced research and ensuring that U.S. companies will continue to do their R&D here in the U.S.

AIM is supporting passage of the R&D credit renewal as part of a national coalition that also includes many AIM-member companies, including Abbott Laboratories, Intel, Procter & Gamble, Microsoft, EMC, GlaxoSmithKine, Pfizer and Raytheon.

Please email Eileen McAnneny, emcanneny@aimnet.org,  if you would like to receive updates about this issue.

RD.Credit

Topics: Associated Industries of Massachusetts, Taxes, Innovation

Expensive Health Insurance Mandates Threaten to Worsen Cost Crisis

Posted by Eileen McAnneny on Sep 21, 2011 12:12:00 PM

The escalating health insurance cost crisis in Massachusetts has not stopped Beacon Hill lawmakers from introducing more than a dozen bills that would impose expensive new health care mandates requiring insurers to cover everything from aqua therapy and Devic’s Disease to "linguistically appropriate” mental health service.

Health mandatesAIM opposes new mandated benefits for three distinct but related reasons.

First, mandated benefits are one reason the cost of health insurance in Massachusetts is so high. A few years ago, the Division of Health Care Finance and Policy released a report examining the cost of mandated benefits. The report estimated that current mandates account for $1.3 billion or 12 cents of every dollar paid for health insurance.  With the total spend on health care growing each year, the number has increased in absolute terms and has become less affordable for insurance purchasers in these challenging economic times. Adding new mandates will increase the cost of health care for employers and runs counter to the need to control costs.

People of good intent will always be able to make an emotionally compelling case for a new mandated health insurance benefit by arguing that it helps society. The problem is that the cumulative cost of all the “societal goods” piled upon health insurance will ultimately erode the economic foundations of that same society.

If we are serious about taking cost out of the system, we have to acknowledge there are limits to what insurance can pay for. We also need to re-educate consumers, constituents, employees about the premise of insurance – it is to ensure against catastrophic harm and not to pay first dollar coverage for all anticipated health expenses. 

Second, adding new mandated benefits runs counter to the goals of payment reform.  Payment reform is about delivering medical care in an efficient, coordinated manner as a way to take costs out of the system. It is about reducing care that is not clinically necessary, even if the patient thinks he or she needs such care. Payment reform also involves educating the public that where they get their care, what type of care they receive and how much care they consume impacts the cost of health insurance. More care is not necessarily better care.

A third reason for opposing mandated benefits is that they burden small businesses only. Large, self-insured employers are subject to the provisions of the federal ERISA law and not subject to state insurance laws.  It is thus the smaller companies who are least able to shoulder this additional cost that would be subject to the new mandate provisions.

AIM also testified this week in opposition to a now-familiar bill that would give state government the authority to regulate hospital staffing. The proposed bill is projected to add between $200 million and $500 million annually to the cost of health care delivery in the commonwealth. Adding hundreds of millions in costs in a short time frame – with no proven effect on patient care or the public’s health – is directly contradictory to our collective goal of creating lasting cost containment strategies.

Topics: Massachusetts Legislature, Associated Industries of Massachusetts, Health Care Costs

Massachusetts Eats its Peas without Washington Budget Acrimony

Posted by Eileen McAnneny on Jul 15, 2011 10:37:00 AM

Boston and Washington provided a study in contrasts this week on the ability of government to manage its expenses during times of fiscal distress.

Patrick.Signs.2012.Budget.SmallAs federal budget negotiations devolved into a desperate game of chicken over raising the nation’s debt ceiling, Governor Deval Patrick quietly signed a Fiscal Year 2012 state budget designed to close a $1.9 billion budget gap without new taxes.

Sure the $30.6 billion Beacon Hill spending blueprint was finalized 12 days late. Yes, the deliberations included plenty of contentious debate over collective bargaining. And the judicial branch ended the week in full revolt over budget reductions by threatening to close 11 courthouses and asking the governor to cease appointing new candidates to the bench.

But the governor and the Legislature ended up achieving remarkable consensus in the fourth consecutive year of fiscal crisis following the recession of 2008. That consensus produced a budget with much to like for employers still struggling to accelerate hiring in an uncertain economic recovery:

  • The decision to avoid tax increases indicates that lawmakers believe that the only way to solve the commonwealth’s long-term budgetary issues is through economic expansion and job growth.
  • The budget gives cities and towns the ability to control soaring health insurance costs by changing the design of employee health coverage after an expedited 30-day bargaining window. The provision matters to employers who have been concerned that spiraling health costs threaten the ability of cities and towns to provide the educational, safety and public works services that businesses need.
  • The employer-funded Massachusetts Workforce Training Program will be placed into a trust that will remove the program from the uncertainties of annual budget deliberations. The flagship program through which Massachusetts improves the skills of workers has provided $193.2 million in grants since its inception to some 2,500 Massachusetts employers to train 277,351 people.
  • The budget includes three tax reforms designed to strengthen the state’s business climate and enhance fairness and predictability for taxpayers: speeding tax audits, establishing equal rules for taxpayers and the Department of Revenue and providing early notification of changes in tax policy.

There were disappointments in the budget process as well:

  • Governor Patrick vetoed two provisions essential to the stability of employer-sponsored health plans: One would have required the Massachusetts Division of Insurance (DOI) to notify health plans 60 days in advance if they plan to reject insurers’ proposed health insurance rates. The other would add additional actuarial criteria the DOI has to take into consideration before rejecting insurers’ premium rates. AIM and other business groups have asked the Legislature to override these vetoes.
  • The final budget omits a proposal originally passed by the House of Representatives to narrow the onerous treble damages provision for violations of wage and hour laws.
  • Also omitted was a House-passed measure to repeal the pharmaceutical gift ban that threatens job growth in one of the economy’s most important sectors.

AIM will continue work with lawmakers outside of the budget process to address the treble damages law and pharmaceutical gift ban, both of which raise red flags for companies evaluating whether or not to do business in Massachusetts.

“On balance, the budget creates fiscal stability and takes a courageous step toward empowering cities and towns to save up to $100 million on health insurance costs,” said John Regan, Executive Vice President of Government Affairs at AIM.

“And all that without people walking out of negotiations, without brinksmanship, without talk of eating our peas and without the level of acrimony that has consumed Washington.”

Topics: Massachusetts state budget, Massachusetts Legislature, Govenor Patrick

Employers, Consumers Hold Key to Resolving Health Cost Crisis

Posted by Eileen McAnneny on Jun 28, 2011 1:11:00 PM

Massachusetts will solve its health-care cost crisis only if employers and consumers become engaged in the issue and change the way they purchase medical services, AIM President and Chief Executive Officer Richard C. Lord told a state hearing this morning.

Employers' Campaign for Affordable Health“Doctors, hospitals and insurers in Massachusetts are moving aggressively to change the financial model of health care in a way that will reduce expenditures. The ultimate success of those changes will depend upon the ability of employers and citizens to evaluate the cost and quality of their health care in the way they do for cars and other purchases,” Lord said at the annual health-cost trend hearings sponsored by the Massachusetts Division of Health Care Finance and Policy.

Lord said AIM recently established the Employers’ Campaign for Affordable Health to help businesses and their employees become informed health-care consumers. The AIM educational effort – which will include Web resources, online programs and seminars - is expected to resemble the campaign the association undertook to explain the 2006 Massachusetts Health Care Reform Law.

Lord’s comments echoed a report issued last week by Attorney General Martha Coakley urging consumers to shift the manner in which they purchase health care to align payments with value – measured by factors such as reasonable cost and good quality of care.

“It is essential that businesses and consumers be engaged in efforts to promote a value-based health care market,” the report said.

Lord said three of Coakley’s conclusions hold particular interest for employers seeking to reduce health insurance costs:

  • There is wide variation in the payments made by health insurers to providers that is not adequately explained by differences in quality of care;
  • Tiered and limited network products have increased consumer engagement in value-based purchasing decisions; and
  • Health care provider organizations designed around primary care can coordinate care effectively.

“The central message to employers and to employees is this: the more affordable medical care provided by tiered networks does not equal bad medical care,” Lord said.

Private group health insurance premiums in Massachusetts grew by 5 percent to 10 percent annually when adjusted for benefits from 2007 to 2009, far outpacing growth in the Consumer Price Index in the Northeast over the same period. Private payer health spending increases were driven largely by provider price increases, while smaller growth rates in the public sector were attributed to increased utilization.

Governor Deval Patrick and key state legislators who spoke at the health-cost hearings Monday affirmed their determination to address the surging medical costs that continue to impede the economic recovery. The governor left little doubt that he wants a cost-reform bill on his desk before the end of the year.

“We need the Legislature to get me final legislation for signature this fall because the cost trends we are discussing today are about more than numbers and data sets. They are about people and their most urgent needs,” Patrick said.

Employers looking for a “plain English” summary of the health cost debate and what it means to their companies are invited to join AIM for a free Webinar on July 6 from 9-10 a.m.

 

Topics: Associated Industries of Massachusetts, Health Care Costs, Deval Patrick, Richard Lord

AG's Health-Cost Mystery Release is Must Reading for Employers

Posted by Eileen McAnneny on Jun 22, 2011 9:52:00 AM

Looking for a blockbuster to read at the beach this summer? Attorney General Martha Coakley and the Mystery of Spiraling Health Care Costs should be at the top of every employer’s reading list.

CoakleyOK, it may not have quite the suspense of Stieg Larsson, but the attorney general’s newest release has some eye-popping lessons both for employers looking to reduce their health costs and policymakers seeking to overhaul the entire health care system.

Read the Report

Coakley released the report, her second major investigation of medical costs in Massachusetts, this morning.

Her report finds that:

  • Doctors and hospitals charge widely different prices for the same medical services.
  • The quality of medical care has no correlation to the price of that care.
  • Globally paid doctors (those who accept a set annual payment to care for each patient) do not have a lower total medical expense than fee-for-service providers. The finding is important because most state policymakers believe that global payments hold the key to reducing health care costs.
  • Wealthy people spend more on health care than less affluent people.
  • The number of consumers choosing limited, or tiered, networks is increasing. These networks offer consumers access to high-quality medical care at reasonable prices.
  • Preferred Provider Organizations (PPOs), where patients do not have a primary care physician, create significant impediments to the coordination of care.
  • Primary care physicians provide the most coordinated care, regardless of the payment methods used. Primary-care doctors are expected to play a central role in the pending overhaul of the health care finance system.

The report is based upon data from private health insurance plans for the year 2009.

What are the lessons for Massachusetts employers struggling to manage health care premium increases of up to 40 percent annually?

  • Consider purchasing a health insurance product that offers tiered networks that rank doctors and hospitals based on cost and quality.
  • Purchase a product that requires your employees to use a primary care physician.

The relatively inexpensive medical care provided by tiered networks does not equal bad medical care. The attorney general’s finding that the quality of health care has nothing to do with the sticker price may shock a commonwealth filled with world-renowned medical institutions, but it should be a wake-up call for employers.

What are the lessons for Massachusetts policymakers?

  • The government may need to step in to fix the price variations in the market place by temporarily restricting the amount of money doctors and hospitals may charge for their services. AIM advocated for such an approach last year and testified again in favor of the concept this year.
  • “Global payments” are not a panacea. Legislators and the Patrick Administration cannot simply change the way medical providers are paid without also addressing the persistent issues of market power and reputational pricing that the attorney general says drive up the cost of health care.

Coakley’s report is a sequel to her ground-breaking report last year that found prices paid by health insurers to hospitals and physician groups vary significantly within the same geographic area and among providers offering similar levels of service. 

The 2010 found that price variations were not caused by:

• The sickness of the population served or complexity of the services provided;
• The extent to which a provider cares for a large portion of patients on Medicare or Medicaid;
• Whether a provider is an academic teaching or research facility; and
•  Differences in hospital costs of delivering similar services at similar facilities.

In other words, purchasers have been overpaying some health care providers for years for no apparent reason. 

AIM and the Employer’s Campaign for Affordable Health strongly urge Massachusetts employers to read the attorney general’s report. Here’s the simple truth – we cannot lower health insurance costs unless employers are engaged and informed.  Please post your comments and questions about the report in the comment section below.

Looking for a summary of potential solutions to rising health care costs? Join AIM for a free Webinar on July 6 from 9-10 a.m. We’ll explain the issue in plain English and outline what it all means to your company.

Topics: Associated Industries of Massachusetts, Health Care Costs, Attorney General Martha Coakley

Generous Health Plans Strangle Massachusetts Cities, Towns

Posted by Eileen McAnneny on Apr 5, 2011 10:06:00 AM

Financially strapped cities and towns in Massachusetts spend 37 percent more to provide health insurance to their employees than the amount spent by private companies as measured by the AIM Benefits Survey, according to a report released this morning.

Municipal Health InsuranceThe report by The Boston Foundation and the Massachusetts Taxpayers Foundation, entitled Municipal Health Plans: Gilded Benefits from a Bygone Era, concludes that municipalities face a deepening financial crisis because of generous health insurance benefits under which employees pay minimal co-payments or deductibles. The result: some cities and towns face significant layoffs because they must use more than 20 percent of their budgets to buy health insurance for employees and retirees.

The study urges state lawmakers to support moves to allow municipal officials to negotiate health insurance plan design outside of collective bargaining. AIM has filed a bill that would permit those negotiations, while Governor Deval Patrick and other have filed slightly different reform proposals.

“Employers care about municipal health care costs because the more money that cities and towns must spend on health premiums, the less they spend on schools, public safety, roads, bridges and other services that impact the Massachusetts economy,” said John Regan, Executive Vice President of Government Affairs at AIM.

The new report compares health insurance benefits in 14 Massachusetts municipalities with two plans offered to state employees, the Federal Employees Health Benefit Plan and statistics on private coverage taken from the 2010 AIM Benefits report, Trends and Practices Among Massachusetts Employers. Among the comparisons:

  • The average municipal family plan premium of $20,925 is $5,600 higher (37 percent) than the average private sector family premium, 33 percent more than the federal plan premium, and 21 percent more than the state’s Group Insurance Commission plans.

  •  In the municipal plans, the average co-payment for a visit to a primary care physician (PCP) is $11. State, federal, and private sector employees on average pay almost twice as much for visits to a primary care physician. Specialist visits averaged $14 for municipal workers, while the co-pays were a minimum of $20 in the GIC plans, $30 for federal workers, and averaged $20 for private sector HMO plans.

  • Municipal employees pay less for generic prescriptions than other employees.

  • Nine of the 14 communities had no co-pays for most other medical services, including high-tech imaging, outpatient surgery, and inpatient hospitalization. The other five communities have no co-payments for high-tech imaging but have co-payments averaging $128 and $228 for outpatient surgery and inpatient hospitalization. State, federal, and private sector workers pay at least $75 for high-tech imaging, $150 for outpatient surgery, and $250 for an inpatient hospitalization.

  • No municipal plan studied includes a deductible. In the other public and private plans, members are responsible for a minimum deductible of $250 for individuals and $700 for families.

Topics: Municipal Reform, Health Care Costs, Health Insurance

Governor Launches Landmark Effort to Control Health Costs

Posted by Eileen McAnneny on Feb 17, 2011 3:28:00 PM

Governor Deval Patrick took an historic first step today toward resolving the health care cost crisis that for more than a decade has eroded the ability of employers to create economic opportunity for the citizens of Massachusetts.

Health care cost controlThe governor unveiled an initiative designed to reduce health insurance premiums over several years by encouraging a  shift from the current fee-for-service system of paying medical providers to one that encourages doctors and hospitals to form integrated networks, and rewards them for good patient outcomes and preventative care.

The administration stopped short of mandating the end of the fee-for-service system for privately insured patients, but set a goal of moving most Massachusetts residents into integrated Accountable Care Organizations (ACOs) by 2015.  In the meantime, the state will shift approximately 1.7 million state employees, Medicaid subscribers and Commonwealth Connector enrollees to ACOs by 2014.

Patrick also proposes to expand the strategy launched last year of disapproving health plan rate-increase requests that the commonwealth deems excessive. The cost overhaul bill would allow the Commissioner of Insurance to reject premium increases for which the underlying rates charged by doctors and hospitals are excessive.

The governor made clear during a noontime briefing with business leaders that the initiative will succeed only if it makes health insurance more affordable than it has been for employers and individuals.

“Massachusetts led the nation on health care reform and is poised to lead again on health care cost containment,” Patrick said. “With 98 percent of the Commonwealth’s residents insured, we have shown how government, consumers, insurers and providers can work together to realize the goals of health care reform. Our next major achievement in this arena will be controlling costs while ensuring that the people of Massachusetts continue to receive world-class care.”

The governor announced his cost control bill - An Act Improving the Quality of Health Care and Controlling Costs by Reforming Health Systems and Payments - during a speech to the Greater Boston Chamber of Commerce. He publicly acknowledged Associated Industries of Massachusetts President Richard C. Lord as someone who will play a key role representing employers as the landmark reform takes shape.

AIM, which has pushed aggressively for structural changes to the health care payment system, welcomed the governor’s proposal.  The association is reviewing details of the bill, but Lord said today’s announcement signals new momentum toward solving an issue that a staggering 97 percent of AIM member employers have identified as their top concern.

“Massachusetts has a unique opportunity and responsibility to solve the health cost puzzle.  Four years after the commonwealth became a model for expanding coverage, it’s time for Massachusetts to establish a model for making world-class health care affordable for employers who can no longer sustain premium increases of 20, 30 or 40 percent as they struggle to provide coverage to workers,” Lord said.

He stressed, however, that the commonwealth’s move to encourage, rather than mandate, use of global payments and ACOs means that employers will have to take the initiative to ensure they are included in the new cost-control system.

AIM also commended the Patrick proposal for including medical malpractice reform, a longtime AIM priority. The proposal would  emphasize prompt resolution of malpractice cases, de-emphasize “defensive medicine,” reduce the number of costly lawsuits and improve care.

The governor’s bill represents the latest in a series of developments that signal a developing consensus around the need to address health care costs:

  • The chief executive of Blue Cross Blue Shield of Massachusetts urged hospitals recently to adopt global payments and warned that providers who hold onto traditional fee-for-service arrangements face level or reduced payments.
  • Massachusetts employers are migrating to tiered health plans that reduce costs and preserve benefits by when companies and their workers do business with community hospitals and other facilities that deliver verifiably cost-effective health care.
  • The governor and the business community appear to be on the same page when it comes to helping struggling cities and towns reduce their cost of providing health insurance. The administration filed a bill recently that would require all cities and towns to either join the state-run Group Insurance Commission or institute a program “of equivalent value and cost.”

Topics: Associated Industries of Massachusetts, Health Care Reform, AIM, Health Care Costs, Health Insurance, Deval Patrick

Employers Embrace New Health Plans to Reduce Costs

Posted by Eileen McAnneny on Feb 10, 2011 2:54:00 PM

Massachusetts employers are migrating to new health insurance plans that limit premium increases by encouraging customers to seek quality care at reasonable rates, The Boston Globe and WBUR report today.

Health costsAIM applauds the trend. The association has for months urged employers to use tiered networks to control the spiraling cost of health insurance. AIM will make the case this spring to members that these products provide value and make both employees and providers aware of the cost of care.

The Globe article reports that hundreds of small businesses have signed up for a new tiered product offered by Blue Cross Blue Shield of Massachusetts, making it the fastest product launch in the insurer’s history. Tufts Health Plan and Harvard Pilgrim Health Plan also report significant interest in their new tiered offerings.

The trend will likely accelerate in the spring when the health cost control law signed by Governor Deval Patrick in August takes effect. The law requires Massachusetts health plans to offer at least one limited or tiered network product that is at least 12 percent less expensive than a comparable full-network offering. 

The idea behind limited networks is simple – find quality medical care at reasonable prices. That means avoiding high-cost providers for procedures that can be performed just as well in lower-cost, community settings.

In a tiered network plan, the patient’s ability to choose where to have care provided is preserved, however, he or she may have to pay more to receive care at more expensive medical facilities. In a limited network product, access to those high cost facilities is prohibited altogether.

“These innovative products that differentiate between providers give employers the opportunity to control health care expenses that have in some cases been rising as much as 20 percent to 40 percent per year,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Limited and tiered networks begin to address one of the leading cost drivers in Massachusetts – the gaping disparity in rates among doctors and hospitals within commonwealth for the same service and same quality outcome. A recent report by the Massachusetts Attorney General concluded that the primary driver of health costs is the variation in rates that certain hospitals and physician groups are able to charge relative to their peers.

The growing popularity of tiered-network plans is one of several recent developments that together show considerable momentum building for controlling health care costs in Massachusetts.

Consider:

  • The chief executive of Blue Cross Blue Shield of Massachusetts is urging hospitals to adopt a new global payment system and warned that providers who hold onto traditional fee-for-service arrangements face level or reduced payments.
  • The Patrick administration is preparing to file health cost legislation that is widely expected to institute a payment system under which medical care providers are put on an annual budget and given incentives to control costs and improve care instead of being paid for individual doctor visits and procedures.
  • The governor and the business community appear to be on the same page when it comes to helping struggling cities and towns reduce their cost of providing health insurance. The administration filed a bill last week that would require all cities and towns to either join the state-run Group Insurance Commission or institute a program “of equivalent value and cost.”

Topics: Associated Industries of Massachusetts, AIM, Health Care Costs, Health Insurance, Health Care

Massachusetts Blue Cross CEO Adds Momentum to Health-Cost Control

Posted by Eileen McAnneny on Jan 24, 2011 3:59:00 PM

The push to control health costs in Massachusetts gained significant momentum over the weekend as the chief executive of Blue Cross Blue Shield of Massachusetts urged hospitals to adopt a new global payment system and warned that providers who hold onto traditional fee-for-service arrangements face level or reduced payments.

Health cost controlBlue Cross President and CEO Andrew Dreyfus, in a letter to hospitals and physician practices reported Sunday in The Boston Globe, noted that “we all know that rising costs continue to threaten the health care that is so important to our community.

“Health care costs are making businesses in Massachusetts less competitive, and limiting their ability to grow. Health care costs are squeezing municipal budgets, taking money from schools and police and fire protection, and health care costs are consuming too much of family incomes, forcing many families to make difficult sacrifices,” Dreyfus wrote.

Dreyfus’ comments came as the Patrick administration prepares to file health cost legislation that is widely expected to institute a payment system under which medical care providers are put on an annual budget and given incentives to control costs and improve care instead of being paid for individual doctor visits and procedures.

Associated Industries of Massachusetts, which has been at the forefront of efforts to resolve the insurance crisis facing employers, applauds Dreyfus’ comments as a constructive step in helping employers suffering with rate increases of up to 40 percent. Employers remain ready to work with lawmakers, doctors, hospitals and insurers to ensure that spiraling health costs do not divert an already tentative economic recovery.

We encourage members to read the full article and to leave your comments below.

Topics: Employers, Associated Industries of Massachusetts, AIM, Health Care Costs, Health Care

President May Reconsider Burdensome 1099 Rules in Health Reform

Posted by Eileen McAnneny on Nov 4, 2010 4:38:00 PM

President Barack Obama provided some welcome news to employers yesterday when he signaled a willingness to reconsider a provision of the health reform law that will require businesses to file 1099 tax forms for every vendor that sells them more than $600 worth of goods and services.

Health reformThe provision, due to take effect in 2013, will require more than 30 million U.S. companies that currently only have to tell the IRS the value of services they purchase from vendors to also report the value of goods and merchandise they purchase. Lawmakers added the 1099 reporting footnote to the federal health reform bill to raise an estimated $17.1 billion.

“You know, for example, I know one of the things that’s come up is that the 1099 provision in the health care bill appears to be too burdensome for small businesses.  It just involves too much paperwork, too much filing,” President Obama said in his press conference the morning after mid-term elections.

“It’s probably counterproductive. It was designed to make sure that revenue was raised to help pay for some of the other provisions, but if it ends up just being so much trouble that small businesses find it difficult to manage, that's something that we should take a look at.”

The president made his comments as Republicans emboldened by a new majority in the House of Representatives suggested they might attempt to repeal portions of the reform or cut off financing.

AIM wrote about the 1099 issue in September and has supported changing the provision. The Senate in September rejected an amendment by Republican Michael Johanns of Nebraska to scrap the new 1099 rules. Senators also rejected a White House-backed alternative that would have increased the 1099 threshold to $5,000 and exempted businesses with fewer than 25 workers.

Senator Scott Brown voted in favor of the Johanns amendment and against the Democratic alternative, while Senator John Kerry voted against the Johanns amendment and in favor of the alternative.

AIM believes the 1099 provision would saddle employers with significant administrative and accounting expense at a time when many are already struggling with the soft economy. Implementation of federal health care reform will be a long and difficult road without the support of our nation’s small businesses.  Imposition of the 1099 requirement on small businesses in 2013 could derail support for the majority of the reform bill effective in 2014.

Congress should rethink this ill-advised provision as it undermines both the promise of savings for small businesses from health care reform and runs counter to efforts by the Obama administration and Congressional leaders to help small businesses.

Topics: Employers, Associated Industries of Massachusetts, Health Care Reform, AIM, Health Care Costs

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