Richard C. Lord, President and CEO, Associated Industries of Massachusetts, says all of the federal health reform bills are fatally flawed by not adequately addressing cost containment:

One of the biggest disappointments for the business community concerning the health care debate currently taking place in Washington is the near total lack of attention to cost containment. We all know that in Massachusetts we deliberately chose to address access first, and in that regard, we have been very successful — over 97% of our residents have health insurance, with over 400,000 becoming newly insured since the law passed in 2006. But not addressing the cost of health care now presents enormous challenges for both our state health care reform efforts as well as for consumers and businesses who are struggling to afford ever increasing premiums. So I was hopeful that federal reform would at least begin to tackle the cost problem.

Unfortunately, the pending federal bills barely address costs, and indeed are financed by huge cuts in Medicare payment rates (shifting costs to private insurers) or new taxes on health plans, pharmaceutical companies and other providers, which will be passed on to consumers in the form of higher premiums. Read more…

There has been a lot of discussion recently about whether health care reform needs to include the option of a “public plan”. Our experience in Massachusetts has convinced me that health reform with virtually universal coverage is very achievable without the total disruption to the marketplace and our employer based system that would occur with the creation of a public plan.

The proponents for a public plan have argued that such a plan is necessary to promote competition and to keep the private plans “honest”. They seem to ignore the fact that we already have 1500 private plans being offered in the country – I fail to see how one additional plan will change the competitive landscape. Read more…

On January 12th I participated in a media briefing sponsored by the American Benefits Council, a national trade association whose members are primarily large employers concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The briefing unveiled the Council’s plan for national health care reform, which in many aspects bears a striking resemblance to the Massachusetts health care reform law. I was invited to participate in order to share my experience, and that of the Massachusetts employer community, with our state’s initiative.

The Council’s proposal, like our reform, builds upon the existing employer-based system through which the majority of working Americans receive health insurance coverage. It requires all individuals to obtain at least a basic level of care (individual mandate) accompanied by income-based premium subsidies for lower-income workers (sounds a lot like Commonwealth Care). The plan calls for the establishment of a broad multi-stakeholder advisory panel (kind of like a Connector) which would establish a minimum standard for quality, affordable health coverage (we call this minimum creditable coverage). All of this sounds awfully familiar to those of us in Massachusetts who have been living and breathing health care reform for the past several years.

The Council does go further than we have in attempting to tackle a range of cost and quality issues in addition to expanding access. Read more…

A flurry of legislative and regulatory activity surrounding health care reform during the summer and fall prompted Associated Industries of Massachusetts (AIM) to conduct a series of updates for employers throughout Massachusetts. AIM did more than half of these sessions in partnership with the Commonwealth Health Insurance Connector Authority (Connector).

Common threads, some unexpected, ran through all of the sessions. Here are a few impressions from employers representing companies of diverse size, industry, and geographic location:

• Participants are impressed by how much has been accomplished in a year and a half of health care reform. The reaction was apparent when Connector officials shared news about the 439,000 previously uninsured people who now have coverage. The nodding heads of employers conveyed pride in learning that they live and/or work in the state with the lowest uninsured rate in the country.

• Employers were also impressed to learn that, of the 191,000 newly-insured people who have private insurance, 159,000 have obtained that coverage through their employers. Many of the employers have seen increased enrollments and resulting cost increases in their own businesses, but were unaware of the statewide numbers.

• Employers remain frustrated about rhetoric suggesting that they are not doing their share. Read more…

The business community in Massachusetts certainly deserves credit for its staunch support of health care reform since the passage of Chapter 58 in April of 2006, despite the new responsibilities which it entailed. Some employers have seen increased costs as a result of their employees signing up for their health insurance plan in far greater numbers in order to comply with the state’s new individual mandate. Virtually all employers have experienced a significant increase in administrative burdens as a result of the reform, e.g., establishing section 125 plans to allow their employees to purchase health insurance with pre-tax dollars, collecting Health Insurance Responsibility Disclosure (HIRD) forms from all of their employees, allowing dependents to remain on their parent’s insurance plan for up to two years and calculating the related imputed income, etc. Despite these additional compliance requirements, business support for health care reform has remained high.

Now, however, the employer community faces a new reporting requirement, effective next year, that serves no useful purpose yet imposes a needless administrative burden on thousands of Massachusetts companies and organizations. Read more…

Last week Governor Patrick filed a supplemental budget request with the Legislature to generate $130 million in new revenue during FY 09 to fill an alleged shortfall in funding for health care reform. Not only is this request for new money premature – a shortfall is by no means certain – but it also falls dispro-portionately on the backs of employers in Massachusetts at a time when they are reeling from record energy prices, a sluggish economy and a $500 million increase in taxes approved earlier this month. So much for the “shared responsibility” theme that was a hallmark of the original law in 2006!

The state’s FY 09 budget includes $869 million for the Commonwealth Care program, a key component of health care reform providing subsidized insurance for low-income residents. This level of funding would support 225,000 enrollees. Currently Commonwealth Care serves 174,000 Massachusetts residents, an enrollment level that has been virtually flat since February when the state began reviewing eligibility for individuals who had been on the program for at least a year. There is no evidence that enrollment is going to increase dramatically and create a funding gap by the end of this fiscal year. So there is no need to impose new financial burdens on beleaguered Massachusetts companies.

Look at the details of the recommendation from the Administration, and you realize that almost all of the new costs will be borne by the business community. Read more…

One of the basic tenets of the Massachusetts health care reform law was “shared responsibility” among individuals, employers and government. Our law placed several new requirements on employers such as: setting up Section 125 plans for all employees to enable them to purchase health insurance on a pre-tax basis, expanding dependent coverage up to the age of 26, and the imposition of a $295 annual assessment on employers who fail to make a “fair and reasonable” contribution to their employees’ health insurance. In the past few months, some policy makers have called for additional financial contributions from the business community, particularly in light of a potential funding shortfall next fiscal year if the number of people enrolling in state subsidized health insurance (Commonwealth Care) continues to rise above expectations.

Two months ago, the Massachusetts Association of Health Plans released a survey of its members which more fairly documented the true financial commitment by employers in health reform. Read more…

The Commonwealth Health Insurance Connector Authority’s plan to raise enrollees’ monthly contributions to Commonwealth Care, though met with cries of outrage, is a reasonable step in response to escalating costs and unexpected enrollment levels. The proposed rate schedule is very progressive, and the dollar amounts are small – we have already raised the ceiling for zero contribution from 100% to 150% of the federal poverty level (FPL), and increases are $5 up to 200% of FPL, $10 up to 250%, and $15 up to 300%. But why are even these modest increases necessary?

First, there is a state fiscal issue: The budget is already in structural deficit, costs of government are rising (in large part because of health care), there are powerful competing priorities such as education aid, revenues are threatened by an economic slowdown, and tax increases are off the table (with a proposal to eliminate the personal income tax headed for the ballot).

Second, the federal government is critically involved because it must approve the state’s Medicaid waiver, and commit itself to paying a 50% share of the cost of MassHealth programs; and the President has proposed reducing Medicaid funding in next year’s budget. Read more…

I recently received phone calls from a few small employers who are members of Associated Industries of Massachusetts (AIM) expressing strong concern about the new “minimum creditable coverage” (MCC) standards which will become effective on January 1, 2009. The provision which is generating the concern is the requirement that insurance must cover prescription drugs in order to fulfill the MCC mandate. Individuals with insurance coverage which does not include prescription drugs presumably will not satisfy the requirements of the individual mandate and will therefore be subject to a penalty as high as $912 in 2008.

Although the new MCC standards are effective on January 1, 2009, in reality, insurance policies are generally in effect for one year, so those renewing on or after February 1st will need to meet the new standards. A recent report released by the Massachusetts Taxpayers Foundation revealed that approximately 163,000 insured individuals do not have prescription drug coverage, 30,000 of whom have non-group coverage and 133,000 of whom have employer-sponsored coverage. These individuals and employers are going to facing very steep premium increases as they renew their coverage in the next 12 months. Not only will they face the 8%-12% “inflationary” increases that most small employers are facing this year, but also their premiums will increase another 15%-20% to reflect the additional cost of a drug benefit.

Although I have to confess that as a board member of the Connector I supported the MCC compromise last March that included prescription drugs, I am now having second thoughts about the wisdom of implementing this requirement as this time. Read more…

The most recent enrollment numbers indicate that approximately 200,000 individuals in Massachusetts, who were uninsured 16 months ago, have health care coverage today. That certainly is great news and should be celebrated by all of those who have been involved in the health reform effort in the Commonwealth. However, a closer examination reveals that most of those newly covered individuals are either enrolled in the state’s Medicaid program or are receiving heavily subsidized insurance through the state’s new Commonwealth Care program. Although that is not totally unexpected – why wouldn’t anyone enroll in programs that provide free or almost free health care – the increased costs to the Commonwealth could present future fiscal concerns. Additionally, it will be very interesting to see whether higher income residents not eligible for subsidized care comply with the looming December 31st deadline when penalties begin to kick in.

The Massachusetts health care reform law mandates that individuals over the age of 18 must have health insurance. Recent profiles of the uninsured indicate that there are significant numbers who a) are relatively young and b) earn above 300% of the federal poverty level and are therefore not eligible for state subsidies. Many of these individuals do not perceive the value of having health insurance because they are young and healthy and do not want to pay premiums that are not inexpensive, even for the young adult plans which have recently become available for 19-26 years olds through the Connector.

The requirement that individuals must have health insurance is a novel one which has never been tried anywhere else in the country. It should not be expected that we can change attitudes and perceptions overnight Read more…