AIMBlog_Logo_Resized

Beacon Hill Earns Solid Grades for 2013-2014

Posted by John Regan on Sep 23, 2014 9:16:46 AM

AIM.ScorecardClasses may have just begun for students throughout Massachusetts, but the report card is already out for Beacon Hill now that the formal portion of the 2013-2014 legislative session is over.

Associated Industries of Massachusetts today released its biennial Legislative Scorecard, the commonwealth’s most widely read review of the votes taken by members of the Massachusetts House and Senate on issues important to the business community.

AIM departed from its normal scorecard practice for the 2013-2014 legislative session because the complexity of the lawmaking process and the sometimes arcane rules of each chamber make it nearly impossible to render a fair judgment on the votes taken by individual legislators. We have instead graded the entire Legislature on its body of work during the past two years.

Download the Scorecard

Topics: Deval Patrick, massachsetts legislature, Beacon Hill

Reducing Regulatory Red Tape

Posted by Christopher Geehern on Jul 24, 2014 2:03:58 PM

Massachusetts employers frequently cite burdensome regulation as a barrier to growth, so it comes as welcome news that the commonwealth has amended or eliminated 255 regulations since 2011.

Patrick.RegulatoryReformGovernor Deval Patrick said this morning that the administration has reviewed all 1,791 executive-branch regulations in existence on January 1, 2012 and weeded out those that were duplicative or out of date.

“Our collective growth and prosperity depends on the growth and prosperity of our small businesses,” the governor said during an event at the Boston Lobster Company.

“These common-sense changes are positive steps forward in improving the business climate by striking a better balance between protecting consumers and communities and enabling innovators to start and grow companies here in the commonwealth.”

The most visible changes for employers have come through the repeal of certain Massachusetts Health Connector regulations, including elimination of the Fair Share Contribution requirement, elimination of the Employer Health Insurance Responsibility Disclosure form and elimination of the requirement that employers offer section 125 plans to pay for coverage through their group health plan or through the Health Connector on a pre-tax basis or be subjected to a surcharge.

Other streamlined rules highlighted by the governor include:

  • The Massachusetts Department of Transportation standardized permitting and police escort fees for oversized loads on Interstate 93 and the Massachusetts Turnpike.
  • The Department of Environmental Protection repealed a duplicative approval process for certain Title V septic systems. The amendments streamline state oversight by ending the requirement that local approving authorities consult with DEP before determining whether facilities asserted to be in separate ownership are in fact a single facility.
  • The Division of Professional Licensure Board of Professional Engineers and Land Surveyors adopted model national professional standards of practice. Regulatory changes reflect technological advances in the licensed professions, such as the use of digitized seals and signatures. 
  • The Department of Public Health adopted a model National Registry of Emergency Medical Technicians (EMTs) examination and certification; reduced licensure fees; allowed online licensure filing; and made changes to EMT scope of practice and training standards.

AIM member employers provided scores of suggestions for regulations that needed to be reviewed during the three-year process.

Brad MacDougall, Vice President of Government Affairs at AIM, said the Patrick Administration review represents a positive first step in what must be a continual process by government and employers to ensure that regulations remain efficient and effective.

“We commend the administration for injecting common sense into the Massachusetts regulatory structure, especially in the area of health insurance,” MacDougall said.

“We look forward to continuing the review process. The ability of government to ensure the public interest without needlessly burdening employers is decisive factor in the future of the Massachusetts economy.”

The governor said the regulatory review is the first comprehensive effort of its kind in Massachusetts history, and one of the first completed reviews in the nation.

AIM members with suggestions about additional regulations that need to be reformed may contact MacDougall at bmacdougall@aimnet.org.


 

Topics: Regulation, Deval Patrick

Baked Beans + Hummus - Israel Offers Strong Market for Bay State Firms

Posted by Kristen Rupert on Jun 5, 2014 1:07:00 PM

(Editor’s note – Kristen Rupert is executive director of the AIM International Business Council.)

I was pleased to represent AIM members last week on Governor Deval Patrick's trade mission to Israel.  More than 100 Massachusetts business and government leaders joined the governor for three days of meetings to expand business ties between the commonwealth and Israel.

Israel.PatrickHere’s what you need to know about doing business with Israel:

  1. Israel is eager to do business with Massachusetts.  Israeli business leaders have a strong appetite for risk-taking and a high tolerance for failure.  They have plenty of energy to start and build companies and partnerships.
  2. There is a history of successful collaboration between Israel and Massachusetts.  Many Massachusetts companies already have a presence in Israel and a growing number of Israeli companies are setting up shop in the Bay State.  Two hundred Israeli companies representing more than 6,600 employees and 23,000 related jobs had operations in Massachusetts as of 2012, according to a recent report by Stax Inc. for the New England-Israel Business Council.  Global companies with Massachusetts headquarters—EMC, Akamai, PTC, Covidien, Kraft Companies, Philips—have made significant investments in Israel in the areas of research and development and manufacturing.
  3. Common language. Most business people in Israel speak English in addition to Hebrew or Arabic.
  4. Strong economy, young workers.  Israel’s economy is growing at a steady rate of 3-5 percent annually.  Inflation and unemployment are low.  Job creation is healthy, though more jobs are needed.   Average age of the work force is 26.
  5. Ease of doing business. The US and Israel have a strong economic and political relationship.  The Free Trade Agreement signed in 1985 eased or eliminated many barriers to trade.  The US is Israel’s largest trading partner.
  6. Compatible cultures and education. Many cultural similarities exist between Massachusetts and Israel.  Education is a priority.  On the trade mission, the University of Massachusetts established a student exchange program with The Technion University in Haifa.  At a cybersecurity seminar during the mission, I sat next to a recent Northeastern University graduate working at her second cybersecurity start-up in Israel.  At the E-Health Summit organized in Tel Aviv by the Massachusetts Technology Collaborative, I met an American-born entrepreneur whose start-up was just accepted into Harvard’s I-Lab.  The highest-ranking US diplomat in Israel, US Ambassador Daniel Shapiro, is a Brandeis University graduate, as is his wife.  The Shapiros hosted an event during the trade mission.
  7. Well-matched key industry sectors.  Israel is generally ranked number one or number two in the world in technology and innovation.  In 2013, Israel produced 1,000 new start-ups—the same number started in all of Western Europe during the same period, according to a briefing by John Medved of Our Crowd, an investor in Israeli start-ups.  Israel is strong in industries that match well with Massachusetts’ strengths: health care, life sciences, clean tech, cyber-security, medical devices, technology, semiconductor, robotics, and higher education. 
  8. Upcoming visits by Israeli business leaders - Ten Israeli start-up companies, chosen from 1,600 total applications, were recently named MassChallenge finalists for 2014.  The founders of those companies will be in residence in Boston for four months starting later this month.  Representing industries as diverse as dentistry, agriculture, food, medicine, clothing and law, these companies are eager to grow their businesses and learn from Massachusetts mentors.  In September, a group of cyber-security executives from Israel is visiting Boston, New York and Chicago.  
  9. Connections established and shared. Massachusetts leaders used the trade mission to establish and strengthen ties with Israeli government leaders, business executives, higher education administrators, entrepreneurs and venture capitalists.  Insights from the mission will be shared by participants at AIM’s upcoming “Doing Business in Israel” seminar in late June or early July.  Contact me at krupert@aimnet.org for introductions or information related to the trade mission.
  10. Baked beans + hummus=the right mix.  This equation was shared in a presentation by an executive of Zerto, a data disaster recovery company co-located in Boston and Israel.  Zerto founders expanded to Boston from Israel because “The Bay State has the right mix of talent, large corporate customers, loyal personnel and is in a preferred time zone.” 

Topics: International Trade, AIM International Business Council, Deval Patrick

AIM International Director Joins Trade Mission to Israel

Posted by Christopher Geehern on May 15, 2014 8:07:00 AM

Rupert.2014Kristen Rupert, Executive Director of the AIM International Business Council, and several AIM member employers will join Governor Deval Patrick May 27–June 4 for what officials say will be the largest state trade mission ever to Israel.

The governor will also visit the United Arab Emirates. 

More than 100 Bay State business executives, academic leaders and state government officials will make the trip as the administration seeks to broaden commercial ties between Massachusetts and two of the fastest-growing economies in the Middle East.
 
Massachusetts has become a hotbed of direct investment by Israeli companies. A recent study by the New England-Israel Business Council determined that Israeli-founded companies in Massachusetts booked $6.2 billion in revenue in the state in 2012 and employed nearly 6,700 people. The study also found that the growth rate of Israeli companies in Massachusetts is five times that of the Massachusetts economy as a whole.

The mission to Israel will center around the U.S.- Israel CONNECTED Summit, a two-day event in Tel Aviv and Herzliya that will bring together hundreds of American and Israeli business and government leaders for industry-specific discussions on medical devices, neuroscience, Internet of Things, eHealth, water tech, and cyber security. Governor Patrick will deliver the keynote address at the conference.

Some members of the Massachusetts delegation will continue on to Dubai and Abu Dhabi, where the governor will meet with leaders from the Masdar Institute of Science and Technology, UAE’s premier research university focusing on advanced energy and sustainable technologies. The mission comes several months after Emirates Airline initiated non-stop air service between Dubai and Boston.

Massport has been working for more than three years to bring direct air service from Tel Aviv to Boston. Negotiations continue.

Rupert, who has developed international business opportunities for AIM members on four previous Massachusetts trade missions, said Israel is an innovation powerhouse and an attractive market for Bay State companies interested in partnerships and exchanges of ideas and talent in a variety of industries.

“Strong connections already exist between the business and academic communities of Israel and Massachusetts, many of which were cultivated during the Governor’s previous mission to Israel in 2011,” she said.

“And the UAE, a relatively new market for Massachusetts, is focused on clean energy, technology and biosciences, which are strengths of our commonwealth.” 

Among the companies participating in the trade mission are AIM members EMC, Foley Hoag, Philips, Steward Health Care, Massachusetts General Hospital, Beth Israel Deaconess Medical Center, Pfizer, Johnson & Johnson, Biogen Idec, UMass, Mintz Levin/ML Strategies, and EMD Serono.

“Massachusetts is already a national leader in the innovation economy, but we can’t compete by looking inward,” said Governor Patrick. “This mission is a tremendous opportunity to strengthen our relationship with key global growth centers, compete for jobs on the global playing field, and position Massachusetts as the North American destination for business growth.”

Employers seeking to establish contacts either in Israel or the UAE may contact Rupert at krupert@aimnet.org.

Topics: International Trade, AIM International Business Council, Deval Patrick

Trade Mission Uncovers Business Opportunities in Mexico

Posted by Kristen Rupert on May 8, 2014 11:53:00 AM

Massachusetts Governor Deval Patrick, who led a trade mission to Central America in March, met recently with 75 Massachusetts business leaders convened by AIM to discuss trade opportunities and challenges in Mexico.

Mexico.PatrickA panel of executives from Waters Corporation, Holland & Knight LLP, Rocheleau Tool & Die, Harvest Power and Harvard Business School spoke about how to succeed in Mexico.

The US-Mexico trade relationship is strong.  More than $1 million in goods crosses the US-Mexico border every minute.  The US exports more to Mexico than to all the BRIC nations (Brazil, Russia, India and China) combined.  Nearly 18,000 US companies have operations in Mexico. 

Mexico is now the third largest—and fastest growing—market for Massachusetts exports.  Bay State companies sold $1.86 billion worth of goods and services to Mexico in 2013, trailing only Canada and China.

But that’s only half the story.  Many Mexican companies are doing business with, and in, Massachusetts.  Two of the previous three presidents of Mexico now live in Boston.  And Mexican business leaders are interested in investing in the commonwealth.

After many years of Mexican government control of key industries - particularly oil, gas, energy, mining and telecommunications - deregulation is now opening up opportunities for US businesses.  Growth potential exists in clean energy, logistics, security, infrastructure, aerospace, electronics, transportation, technology, pharmaceuticals and education.  Mexico is a sophisticated market with a need for products and services at the center of the Massachusetts economy. 

Mexico certainly faces issues: lack of clean water, high poverty levels, inconsistent educational achievement, a need for skilled workers, and security and corruption challenges.  However, progress is being made.  Fiscal reform holds great promise.  Entrepreneurship and innovation are taking hold.  Manufacturing is catching up to the US and Canada in self-sufficiency, and demographic growth and education reform are increasing worker capacity.   

Massachusetts companies are paying attention to the opportunity:

  • Rocheleau Tool & Die of Fitchburg, which manufactures machinery that makes plastic containers, has been exporting to Mexico since 1970. Massachusetts’ historic expertise in plastics has resulted in Mexican businesses seeking out companies like Rocheleau.  The company has negotiated favorable pricing for trucking its product to Mexico.
  • Harvest Power, which uses discarded yard trimmings and food scraps to produce renewable energy, found a compelling business opportunity in Mexico City.  With 25 million people, Mexico City has the largest produce market in Latin America, producing 1,000 tons a day of food waste.  Landfills are full, so waste is transported at high cost to distant locations.  Harvest Power has a Mexican partner with strong domain expertise and local contacts; their joint initiative may bring a Harvest Power anaerobic digester to Mexico soon.
  • Waters Corporation of Milford, which manufactures filters and spectrometers for the pharmaceutical and food safety industries, operates in Mexico City, Monterrey and Guadalajara. 

These employers say that face-to-face contact is critical companies looking to do business in Mexico.  Waters continuously upgrades its equipment to meet increasingly rigorous US and international regulatory requirements, and educates its customers on-site to get the most from new technologies.  Holland & Knight is pursuing a North/South America business strategy, which is why it recently acquired a full-service law firm in Mexico City.  Holland & Knight, which calls itself “bilingual and bicultural,” sees new opportunities in many industries due to recent Mexican government reforms.  Private companies can now get involved in more industry sectors.

Numerous resources are available locally for Massachusetts businesses interested in Mexico.  Mexico Consul General in Boston Daniel Hernandez Joseph, who calls Mexico “a nation of opportunities,” recently announced that Mexico is opening a trade office in Boston.  The Consul General’s office can make introductions to key people in Mexico and facilitate industry contacts.  Interested companies may also contact AIM’s Kristen Rupert, who participated in the recent trade mission to Mexico, at krupert@aimnet.org

Many international customers of Massachusetts companies see North America as one block.  The US-Mexico-Canada partnership represents one of the most competitive regions in the world, and an active transportation corridor exists between the US, Canada and Mexico.  There is also a shared vision among the three countries that we have mutual strengths.  Going forward, as Governor Patrick quoted, “We need to look for ways to build things together, not just buy and sell more to each other.” 

Topics: International Trade, AIM International Business Council, Deval Patrick

AIM Executive Joins State Trade Mission to Panama, Mexico

Posted by Christopher Geehern on Mar 10, 2014 12:41:00 PM

Kristen Rupert, Executive Director of the AIM International Business Council, will be the sole representative of the private sector to accompany Governor Deval Patrick on a trade mission to Mexico and Panama March 17-22, the administration announced this morning.

Massachusetts Trade MissionState officials say the mission will bring together leaders in government and business to strengthen existing relationships and build new ones with the emerging innovation economies of Panama City and Mexico City.

The last Massachusetts trade mission to Mexico occurred in 1999, when then Lt. Governor Jane Swift led a delegation to Mexico City and Monterrey on behalf of Governor Paul Cellucci.

Rupert has previously joined Massachusetts trade missions to Brazil, Colombia and Canada. She has used all of the trips to help AIM member companies identify market opportunities and make connections with potential business and research partners.

“My experience has been that nothing replaces face-to-face contact in trying to establish connections in a new export market. The governor also has the unique ability to open doors for commercial relationships,” Rupert said.

“AIM members benefit from these missions, and numerous companies have seen tangible results. My job is to represent AIM member companies that might not be able to participate but still have an interest in exporting.”

Mexico is the number two destination for all United States goods exports ($226 billion in 2013), outranked only by Canada.   Already a viable manufacturing alternative to China for US firms, Mexico has parleyed a skilled workforce and proximity to the U.S. into a steady growth in GDP since 2010.

Rupert says investment opportunities exist in Mexico for Massachusetts companies in the clean energy, waste management, water innovation and general infrastructure sectors.  Improving access to clean water for Mexican citizens is a priority for the government, and there is strong interest in increasing energy capacity from solar, wind and biomass, while decreasing dependence on fossil fuels.

In a February 2013 New York Times op-ed, Tom Friedman predicted, “Mexico will become a more dominant economic power than China or India in this century.”  Even if wide of the mark, Friedman’s bet suggests that Mexico, with which the US shares the world’s busiest border, is rising in prominence and influence:

  • Mexico is Massachusetts’ third largest export commodities destination, behind Canada and China.
  • Massachusetts exports to Mexico have increased steadily over the past few years, totaling $1.9 billion in 2013. 
  • Massport has identified Mexico City as one of the top priority destinations for direct air service to and from Boston.

Massachusetts also shares a strong relationship with Panama, a relationship that has grown since COPA Airlines added a non-stop flight from Logan Airport to Panama City in 2012.  Massachusetts last year imported approximately $4.34 million worth of goods and services from Panama while exporting approximately $22.5 million worth of goods and services back to the Central American nation.

In Panama, the governor and the delegation will meet with Dr. Ruben Berrocal, Panama’s Minister of Science, the Panamanian Chamber of Information Technology and Communications, officials who oversee the Panama Canal, and innovation leaders in Panama’s “City of Knowledge.” The Panama Canal is currently undergoing an expansion that, once complete, will potentially double the inputs and outputs through the Conley Container Terminal in South Boston.

“Lasting growth in the 21st century global economy will come from our competitiveness in global markets and opening up Massachusetts to the markets where we share strengths,” Governor Patrick said. “The leaders in business and government and venture capitalists of Latin America’s growth centers are eager to collaborate with us because they recognize that Massachusetts is an innovation hub with a disciplined strategy for growth.”

Topics: International Trade, AIM International Business Council, Deval Patrick

Governor, Speaker Affirm Support for Unemployment Insurance Reform

Posted by John Regan on Jan 29, 2014 2:19:00 PM

Massachusetts employers should be encouraged that Governor Deval Patrick and House Speaker Robert DeLeo (right) have both affirmed in the past 24 hours their support for reforming the commonwealth’s antiquated Unemployment Insurance system.

Speaker Robert DeLeoAIM strongly urges lawmakers to ensure that the reform is substantive.

“This is the year we are going to improve our Unemployment Insurance system,” DeLeo said during his annual address to the House this afternoon.

Linking unemployment reform to a push to increase the minimum wage, the speaker told House members that “any increase in the minimum wage must be paired with meaningful improvements to our unemployment insurance system.”

Speaking from the same podium during his State of the Commonwealth address Tuesday night, Governor Patrick said: “We ought to change the incentives in our UI system to encourage the hiring of the long-term unemployed, to make it easier for those on unemployment to start their own business, and to make it more straightforward for companies to comply. I submit that we can have a system that encourages hiring, not one that raises even a second thought about it.”

Massachusetts UI costs, driven by high wages, lenient qualification requirements and an overly generous benefit structure, are among the highest in the country. AIM has long supported changes to the system through which benefits are paid to unemployed workers.

It is a system that has generated dizzying uncertainty for employers during the last six years as lawmakers have been forced to freeze automatic rate increases that were not needed to maintain the financial stability of the Unemployment Insurance Trust Fund. Massachusetts employers saw UI taxes jump 33 percent on January 1, which will drain an additional $500 million unless the Legislature freezes rates before billings go out for the first quarter.

AIM was pleased that Speaker DeLeo today committed to seeking a freeze.

AIM has a clear definition of substantive UI reform:

  1. Adjust the UI rate schedule to require negatively rated employers, those who habitually put employees into the UI system, to pay higher rates than more stable employers whose employees rarely use the UI system; and to require that new employers contribution rate be set at the so-called zero positive rate, more accurately reflecting the employers actual trust fund balance and avoiding "sticker shock" when receiving the actual bill after the first year of operation. 
  2. Increase the work requirement for eligibility to collect UI benefits from 30 times the weekly benefit amount to forty and requiring wages to be paid in at least two quarters, bringing Massachusetts into line with the majority of other states; (estimated annual savings:  $30 million.)
  3. Reduce the maximum duration of benefit weeks from 30 to 26 when the state's economy is performing well by adjusting the statutory trigger mechanism from 5.1 percent unemployment in each of the 10 local labor markets in the state to a straight 5.1 percent unemployment rate statewide over the preceding six months - producing savings in the UI Trust Fund of between $50 and $90 million per year. This provision would bring Massachusetts' benefits into line with all other states.

DeLeo also said the House would produce a Fiscal Year 2015 budget with no new taxes and fees.

“We’ve taken decisive action to make Massachusetts work, to signal to companies near and far that we are open for business, to strengthen our economy and support our citizens during the worst … downturn since the Great Depression,” he said.

 

Topics: Unemployment insurance, Massachusetts House of Representatives, House Speaker Robert DeLeo, Deval Patrick

Ten Tips for Doing Business in Canada

Posted by Kristen Rupert on Dec 18, 2013 9:23:00 AM

This season’s beautiful Boston Common Christmas tree - an annual thank-you gift from the people of Halifax, Nova Scotia to Boston for providing medical assistance after a 1917 explosion in Halifax – carries symbolism not just for the holiday season, but also for the enduring economic relationship between Massachusetts and Canada.

Toronto SkylineCanada is Massachusetts’ largest trading partner, with more than $10 billion in goods and services exchanged in 2012.  Canada is also the United States’ biggest trading partner. 

Massachusetts Governor Deval Patrick led a trade delegation to Toronto and Montreal in October.  That trip, in which AIM participated, included meetings with industry leaders in tourism, financial services, wind energy, life sciences, technology, and digital gaming.

Bay State government officials and private industry executives also met with entrepreneurs running start-up businesses in Canada ranging from farm food for school kids, to roads that generate their own power, to venture funds that support technology companies with women in senior positions.  Other start-ups at the meeting focused on energy efficiency, transportation infrastructure, tooth decay prevention, urban rooftop gardens, and health initiatives.  

Governor Patrick upon his return joined executives from Massachusetts firms Ocean Spray (Lakeville), Lojack (Canton), Foley Hoag (Boston) and Diamond Machining Technology (Marlborough) to address about 75 business leaders from across the commonwealth at an AIM event in Boston titled “Doing Business in Canada.”

The North American Free Trade Agreement makes commerce between the U.S. and Canada efficient and nearly duty-free.  The two countries share cultural similarities.  We mostly speak the same language.  Here in Massachusetts, we are close enough to drive to Canada.  Air travel is also easy; Porter Airlines has eight flights a day between Logan Airport and Toronto’s Billy Bishop Airport, right in the city, and the flight is just over one hour.

Business leaders at the event offered advice about how to succeed trading with Canada:

  1. Learn about hockey.  Hockey is common currency in social and business conversations.  Business gets done at hockey games.
  2. Consider your best way to enter Canada.  One AIM-member company sells through a distributor, two member companies bought Canadian companies with complementary products, and yet another AIM company bought land and set up farming and manufacturing in Canada.
  3. Do your homework and use resources provided by the Massachusetts Export Center, the US Dept of Commerce/Commercial Service, or the Canadian Consulate and the Quebec Office in Boston.  These organizations can help with competitive research, distributor searches and other needs.
  4. Remember that although Canada is very similar to the US, employment laws, labor laws, legal structures and tax policies differ slightly.  Use experts to help you understand the differences.
  5. Build and nurture relationships; these are critical.  Don’t take Canada for granted.
  6. Get the border crossing process right.  As one panelist said, it’s not just about crossing the border, it’s also about getting all the documentation and processes correct.
  7. Respect that French is spoken in Quebec, and make an effort to learn some of that language.  Also understand that the language difference is, as one panelist said, “a speed bump, rather than a road block.”
  8. Look beyond just Ontario, Quebec and the Atlantic Provinces.  Western Canada is experiencing huge economic growth from extraction industries, with many business-to-business and business-to-consumer opportunities for Massachusetts firms.
  9. Help influence trade policy.  The current TPP (Trans-Pacific Partnership) trade negotiations, in which the US, Canada, Japan, South Korea, China and other Pacific Rim countries are engaged, is important to many global customers who would like to deal with North America as a bloc, rather than three separate countries.  The TPP would lower tariffs and other trade barriers.
  10. If you’re not yet trading with Canada, you should start.  It’s a forgiving place to begin.  Per one panelist, “If you do something wrong, it’s like stubbing your toe, versus breaking your leg.”

Topics: International Trade, Massachusetts economy, Deval Patrick

Feds Reject Health Reform Waiver for Massachusetts

Posted by Rick Lord on Sep 26, 2013 1:12:00 PM

The federal government today rejected a request by Massachusetts to waive provisions of the Affordable Care Act (ACA) that could raise premiums for some small Bay State employers by more than 50 percent.

SebeliusAssociated Industries of Massachusetts is gravely disappointed with the decision and will now consider other remedies to help employers, including legal action or supporting legislation to de-merge the insurance market for individuals and small companies.

Secretary of Health and Human Services Kathleen Sebelius issued the denial in a letter to Governor Deval Patrick, who sought a waiver on September 3 from rating-factor limitations imposed by federal health reform for insurance offered to employers with 50 or fewer workers. AIM similarly urged Sebelius in a letter in July to allow Massachusetts to maintain its current nine rating factors for small employers, and to maintain its practice of filing rates quarterly, rather than annually.

Rejection of the waiver came despite last-minute letters of support to Sebelius from U.S. Representatives John Tierney, Michael Capuano, Stephen Lynch and William Keating.

Sebelius argued in her letter that the federal government has already granted Massachusetts a three-year transition to the new rating factor system.

“As a result of your leadership and dedication to this issue, we continue to explore any possible option regarding your request; however, we are unable to grant a permanent waiver from these rating rules. For policy years beginning on or after January 1, 2016, issuers must be in full compliance with the rating rules under section 2701 of the Public Health Service Act,” Sebelius wrote to Patrick.

A study by Massachusetts health insurance companies predicts that the rating changes could raise or lower rates for small companies by up to 57 percent, on top of average increases of 3.7 percent in their base insurance premiums.

“Denial of the waiver will cause health insurance costs to rise significantly for many small employers and their employees in the merged market – for no good reason.  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.

Patrick noted similar concerns in the waiver request.

“Of particular concern is the adverse impact that the rating factor changes will have on small employers and their employees. A waiver of rating factor requirements will avoid increases in health insurance premiums for a large segment of our small-employer population and their employees,” Patrick wrote.

The governor requested regulatory relief under terms of a bill passed by the Legislature last month.

The ACA will limit to four the rating factors used to calculate small group health insurance premiums – age, family size, geographic area and tobacco use. Massachusetts law currently allows for additional consideration of industry, participation rate, group size, intermediary discount and group purchasing cooperatives.

AIM and Patrick maintain that there is no language in federal health reform that expressly prohibits the government from granting waivers for rating factors. The association maintains that the Treasury Department’s decision to postpone until 2015 the requirement that larger employers provide health insurance to workers or pay penalties suggests that the administration enjoys broad administrative authority to take actions that advance the overall goal of expanding coverage.

“AIM is grateful to the governor and the Legislature for their actions to moderate the cost of health insurance for employers and workers alike,” Regan said.

The waiver denial may ultimately force Massachusetts to separate the health insurance markets for individuals and small companies that were merged as part of the 2006 state Health Care Reform law. AIM will support de-merging in an effort to protect our members from outrageous and unnecessary price spikes that could lead business owners to drop coverage - an outcome that would be unfortunate given our members’ longstanding commitment to offering health insurance.

Topics: Health Care Reform, Health Care Costs, Issues, Deval Patrick

Governor Seeks Health Reform Waiver; AIM Urges Employers to Back Move

Posted by Rick Lord on Sep 4, 2013 11:59:00 AM

Governor Deval Patrick formally asked federal officials yesterday to waive provisions of the Affordable Care Act (ACA) that could raise premiums for some small Bay State employers by more than 50 percent.

Health costsThe governor, in a letter to Health and Human Services Secretary Kathleen Sebelius, requests a limited waiver that would allow Massachusetts to maintain the current nine rating factors in its merged individual and small-business health insurance market, and to maintain its practice of filing rates quarterly, rather than annually. The waiver is justified, according to Patrick, because the merged market has allowed Massachusetts to achieve a best-in-the-nation 97 percent insurance coverage for its citizens.

Associated Industries of Massachusetts, which wrote to Sebelius on July 10 to support the waiver request, immediately asked employers to urge members of the Massachusetts congressional delegation to back the governor.

“We are asking Massachusetts employers to contact their members of Congress and urge them to express their support of a waiver to Secretary Sebelius,” said Kristen Lepore, Vice President of Government Affairs at AIM.

“Governor Patrick correctly notes that Massachusetts has a health insurance system that is a model for the rest of the country. It makes no sense to introduce changes to that system that will increase premiums for struggling employers and their workers.”

Governor Patrick requested regulatory relief under terms of a bill passed by the Legislature last month requiring him to seek a waiver from the rating changes and annual rate filing. The ACA will limit to four the rating factors used to calculate small group health insurance premiums – age, family size, geographic area and tobacco use. Massachusetts law allows for additional consideration of industry, participation rate, group size, intermediary discount and group purchasing cooperatives.

“Of particular concern is the adverse impact that the rating factor changes will have on small employers and their employees. A waiver of rating factor requirements will avoid increases in health insurance premiums for a large segment of our small-employer population and their employees,” Patrick wrote to Sebelius.

The governor maintained that Massachusetts has had a strong guaranteed issue market for small employer health insurance since 1992 and remains the only state in the nation with a merged market that includes both individuals and small businesses. The stability provided by the merged market, along with legislative and regulatory reforms, has created a favorable insurance market for small employers during the past two years, according to Patrick.

A study by Massachusetts health insurance companies predicts that changes brought about by federal health care reform, independent of other rating factor changes, will raise premiums for Bay State employers by an average of 3.7 percent on top of typical base-rate increases. The study found that the rating changes could raise or lower rates for companies by up to 57 percent.

“Implementing CMS-9972-F in the Commonwealth will disrupt the relative stability that the insurance market has achieved in Massachusetts since our markets merged,” Patrick wrote.

The governor also agreed with a legal argument made by AIM in its letter to Sebelius that there is no language in federal health reform that expressly prohibits the government from granting waivers for rating factors. AIM told Sebelius that the Treasury Department’s decision to postpone until 2015 the requirement that larger employers provide health insurance to workers or pay penalties suggests that the administration enjoys broad administrative authority to take actions that advance the overall goal of expanding coverage.

AIM is grateful to the governor and the the Legislature for their actions to moderate the cost of health insurance for employers and workers alike.

Topics: Health Care Reform, Health Care Costs, Issues, Deval Patrick

Subscribe to our blog

Posts by popularity

Browse by Tag