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An Open Letter to President Obama: Don’t Punish Health Pioneers

Posted on October 30, 2013

Editor’s note – Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts, sent the following open letter to President Barack Obama in advance of the president’s speech in Boston today on health care reform.

Dear President Obama,

Welcome to Faneuil Hall, birthplace of the groundbreaking 2006 Massachusetts health care reform that served as the model for the federal Affordable Care Act (ACA). Many of us who formed the extraordinary coalition of employers, doctors, hospitals, insurers, consumers and political figures that hammered out the Massachusetts reform were in the same hall seven years ago when then-Governor Mitt Romney signed the law.

ObamaBut as you speak today, thousands of small employers are concerned that key provisions of the ACA that were supposed to dovetail with the Massachusetts reform instead threaten to accelerate the already burdensome cost of health insurance for employers and citizens. Employers are particularly disappointed that your administration recently rejected Governor Deval Patrick’s request for a waiver from two small provisions of federal reform that threaten to raise health insurance rates for many small businesses here by more than 50 percent.

The first provision limits 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. A study by 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.

The second provision is that ACA requires states like Massachusetts that have merged the health insurance markets for individuals and small businesses to set premium rates annually.  Massachusetts currently sets rates quarterly.

Secretary of Health and Human Services Kathleen Sebelius notified Massachusetts on September 3 that the federal government was rejecting the governor’s application for a waiver from the rating-factor limitations and annual rate setting. We’re left to wonder why Massachusetts stands to be penalized for having successfully figured out health reform during the past seven years.

The waiver issue remains particularly frustrating because we here in Massachusetts have become accustomed to working together to adjust, debate, update and revise the 2006 reform law to ensure its success. The coalition of unlikely partners has endured plenty of disagreements and table pounding through both Republican and Democratic governors, but Massachusetts has ultimately persevered and accomplished much of what the ACA is now asking the 49 other states to do.

The percentage of Massachusetts residents without health insurance has dropped from 8 percent before reform to a best-in-the-nation 2 percent today. Employers have stepped up as well, with 77 percent offering health insurance to employees versus 70 percent in 2005.

And Massachusetts is again moving ahead of the rest of the country to tackle the unfinished business of ensuring that its world-class health care system is affordable for employers and individuals alike.  The Legislature last year approved, and Governor Patrick signed, a health-cost control law that will limit increases in medical spending to the overall economic growth rate in Massachusetts ” 3.6 percent this year.

As the Boston Globe noted in an editorial in March: “The Obama administration needs to pay special attention here. Imposing one-size-fits-all regulations on a state that already has universal health care and is leading the way on cost containment is counterproductive to say the least.”

Massachusetts employers have other concerns about the ACA as well.

  • A third-party analysis conducted for the state estimates that the health-care premium tax included in the ACA will cost employers and consumers in Massachusetts $213 million in 2014 and $3 billion during the next decade.
  • ACA will shift employers with between 51 and 100 employees into the merged health insurance market in 2016, resulting in an average increase of up to 9 percent for those companies.
  • A 2.3 percent tax on medical devices that took effect January 1 as part of federal reform will cost one of the commonwealth’s fastest growing industries $411 million a year, according to the Pioneer Institute.

Associated Industries of Massachusetts (AIM) and its 5,000 member employers are proud to have supported the 2006 Massachusetts health reform as a step toward repairing a health-care system that choked the life out of the economy for decades. We undertook an exhaustive educational effort at the time to ensure that every Massachusetts employer, from multinational financial institutions in Boston to restaurants in North Adams, understood their shared responsibilities under an enormously complex law.

AIM’s concerns about ACA do not diminish our support for the mission of both state and federal health reform to make health insurance more affordable and accessible to Americans. Our concerns about ACA are practical, not political. But the rancorous national debate about the fundamental wisdom of health care makes it nearly impossible to solve employer concerns about ACA in the same collaborative manner we used in Massachusetts.

Although we were pleased to be the model for rest of the country, the member employers of AIM respectfully urge you to reconsider Governor Patrick’s waiver request and allow our commonwealth to continue the laudable progress it has made to control health costs for employers and consumers. We would very much like the Affordable Care Act to live up to its name.

We wish you a good visit to Boston and continued success.


Richard C. Lord
President & Chief Executive Officer