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AIM Affirms Aggressive Goal for Slowing Health Costs

Posted on May 9, 2012

Associated Industries of Massachusetts today welcomed a proposal from the state Senate to control health insurance costs, but affirmed that employers want the health care industry to limit the growth of spending on medical care to two percentage points below the overall rate of economic growth.

Health cost controlThe Massachusetts Senate unveiled a bill that leaders say will save $150 billion over 15 years by limiting the growth of medical spending to a level equal to the growth of gross state product by 2016. The proposal follows by five days a cost-control proposal from the House of Representatives that seeks to slow health spending increases to half a percentage point below economic growth in three years.

Both proposals fall well short of the more aggressive spending reduction target suggested by AIM for an industry in which experts agree that at least a third of all care is unnecessary – delivered in the wrong setting; marked by a lack of coordination; provided with an inadequate emphasis on prevention; harmed by medical errors; burdened with rules and fraud; or just plain excessive.

“The relentless and decades-long rise in health insurance premiums has drawn the life out of the Massachusetts economy for both employers and their workers. In a state where consumers pay among the highest insurance premiums in the country, we absolutely need to establish a benchmark of limiting medical spending to less than the rate of overall growth,” said Richard C. Lord, President and Chief Executive Officer of AIM.

Ninety-seven percent of AIM member employers cite the rising cost of health insurance as the one issue that keeps them awake at night. The average cost paid by employers and workers to insure a single Massachusetts family though a health maintenance organization now stands at $15,864, according to the 2012 AIM Benefits Survey. The cost to insure an individual is $6,000.

“Some in the health industry argue that reducing the growth of medical spending will harm a sector that represents 13 percent of the gross state product in Massachusetts. But why should the employers and citizens who make up the other 87 percent of the state economy overpay to support the inefficient 13 percent?” Lord said.

The Senate bill would create a quasi-public Health Care Quality and Finance Authority to monitor compliance with health cost objectives. The measure would also require insurance companies and doctors to tell patients what the fee and final payment will be for a particular medical procedure.

Unlike the House, which envisions a “luxury tax” on high-cost hospitals and doctors, the Senate proposes a remediation process under which providers identified as contributing to excessive cost must file a confidential performance improvement plan with the commonwealth. Both bills establish broad wellness and prevention programs, and require the phasing in of electronic medical records.

Senate leaders say they plan to set a deadline of Friday for lawmakers to file amendments, with full consideration of the bill on the schedule for next Tuesday.

Passage of a health cost control measure would again thrust Massachusetts into the forefront of national efforts to restructure the financial underpinnings of the health care system. The commonwealth passed what remains the only state-level health care reform law in 2006 in an effort to expand access to medical care and bring everyone into the health insurance system.