(Editor's note - AIM last week released the Blueprint for the Next Century, a long-term plan for economic growth and prosperity in Massachusetts. The AIM blog will this week publish one summary each day of the four recommendations contained in the Blueprint. We invite your responses in the Comments section.)
Moderate the substantial burden that health care and energy place on business growth.
Where We Stand | Health Insurance
Massachusetts has enjoyed unique success extending health insurance coverage since the passage of health care reform in 2006 - an impressive 97 percent of residents now have health insurance, by far the largest percentage of any state. But that success is threatened by relentless acceleration of health care costs and the resulting run-up in the cost to employers of providing health insurance to workers.
Where We Can Improve
- Establish a more aggressive benchmark for medical spending under the 2012 Massachusetts health-cost control law. The law currently benchmarks increases in health care spending to the growth rate of the overall economy. We can do better.
- Keep the small-group market size the way it is. The small-group market will expand in 2016 under Federal Health Care Reform from companies with 1-50 employees to companies with 1-100 employees. Forcing employers into the small group market will cause rate increases of at least 10 percent for the 51-100 companies.
- Maintain the current definition of a full-time employee. The Massachusetts definition was 35 hours per week, while federal reform requires coverage for employees working 30 or more hours per week. Employers will respond by reducing the number of hours employees can work. We have already heard from employers who are being forced to do this because of the significant and unaffordable increases in their health insurance costs.
- Repeal the Medical Device Tax under federal health reform. The 2.3 percent excise tax on the sale of medical services is damaging to a key sector of the Massachusetts economy, costing the commonwealth’s largest medical device companies more than $400 million this year alone.
- Continue efforts to make cost and quality information about health care procedures and services available to consumers before treatment. Refine and improve the information and encourage consumers to use it to make informed decisions about their health care. It’s a process that will persuade higher cost providers to lower prices.
Where We Stand | Energy
Average electric rates in Massachusetts are the third highest in the nation for industrial ratepayers at 12.63 cents per kilowatt hour, according to the United States Department of Energy’s Energy Information Administration. Electricity costs have reached crisis stage as a persistent shortage of natural gas for generating plants is driving power prices to record levels for the winter of 2014-2015.
Where We Can Improve
- Support the development of pipelines to transport natural gas into the commonwealth and the development of infrastructure to permit the purchase of hydroelectric power from Canada.
- Environmentalists have been fighting against more natural gas coming into the state for years, which partly explains why pipeline capacity hasn't expanded. They also say consumers can conserve a lot more energy, but Massachusetts is already at the forefront on energy efficiency efforts. The state was just ranked first in the nation for energy efficiency for the fourth year in a row by the American Council for an Energy Efficient Economy.
- Reorganize the Massachusetts Department of Public utilities to the structure that was in place before 2007.
Remove DPU from under Executive Office of Energy and Environmental Affairs, where it has become a political agency, and restore its status as an independent agency under the Executive Office of Housing and Economic Development.
Increase the number of DPU commissioners from three to five, one of whom must be experienced in commercial and industrial ratepayer issues and one of whom must be experienced in residential ratepayer issues.
- Cap all “green programs” or require analysis of such programs that takes into account cost to the ratepayer, not just benefit to the “green” industry.
Make sure that any “green” programs are competitively bid and cover the lowest-cost requirements first. These bids should be technology neutral with no specific carve-outs for “favored” technology.
Reduce/eliminate cross subsidization of “green” programs by eliminating net metering and other programs.
- Disallow utilities from adding “green” programs to distribution costs, a practice that results in customers paying twice for programs.
- Change energy efficiency programs to align changing models with new paradigm.
Allow municipal electric light companies access to Regional Greenhouse Gas Initiative funds to institute energy-efficiency programs.
Allow companies to keep a larger share of their energy efficiency money, provided they use it for energy efficiency purposes.