AIM Opinions

The Return of Rising Health Costs - November 28, 2022

Are rising health-insurance costs re-emerging as a significant challenge for Massachusetts employers?

 

The premiums that companies pay to provide health insurance for their employees have increased persistently, though modestly, during the past two years as most of the attention in health care was focused on the COVID-19 pandemic. The AIM HR Practices survey found that premiums rose an average of 7.2 percent for 2022 compared to 5.9 percent for 2021.

 

But anecdotal evidence is mounting that the pace of premium increases may be accelerating amid surging inflation throughout the economy and increased utilization of health-care services.

 

Some AIM members, especially small businesses, are reporting renewal proposals for 2023 with premium increases of 17-20 percent. Meanwhile, nearly 86,000 people who purchase largely unsubsidized health insurance on the Massachusetts Health Connector face a 7.6 percent premium increase next year, on top of increases totaling at least 31 percent since 2015.

 

Increases in global health-care benefit costs are expected to hit their highest levels in roughly 15 years, with most experts forecasting increases of between 6.5 and 8.0 percent.

 

A survey by Blue Cross Blue Shield of Massachusetts in June found that Bay State residents say their top health concern is not the COVID-19 pandemic or the quality of care they receive but the cost of health care in the state. Additionally, the Centers for Health Information and Analysis reported that 41 percent of Massachusetts residents surveyed from July to December 2021 said they had trouble affording health care.

 

“Employers are already concerned about what they pay for health premiums, but this could be the calm before the storm, as recent inflation suggests that larger increases are imminent,” said Drew Altman, President and CEO of the Kaiser Family Foundation. “Given the tight labor market and rising wages, it will be tough for employers to shift costs onto workers when costs spike.”

 

The rising cost of providing health insurance coverage threatens the competitiveness of Massachusetts businesses and those around the country.  As we all now know, work can be performed from virtually anywhere, so health-premium increases affect the willingness of companies to move, remain, or expand in Massachusetts. The added burdens of rising health-care costs on employers should not be ignored. 

 

What’s happening to health-care costs and health-insurance costs at your company? AIM is asking its 3,400 member employers to complete a short health-care survey to help shape the association’s public- policy advocacy and employer engagement on the cost of health care in the upcoming year. 

 

Thank you for participating. AIM is committed to accurately and aggressively representing your views on this important topic.

The Economic Benefit of Solving the Dropout Problem - November 21, 2022

I’ve been writing the last few weeks about the ever-shrinking number of qualified workers available to fill the positions we need in our Massachusetts businesses. The demographic changes underway in our state are only getting worse, and the problem of attracting and retaining high-quality workers is growing more acute.


But today I want to talk about the other side of the equation – the development of good quality, reliable workers – particularly the development of one of the most untapped resources we already have in plentiful supply: the young people in our urban centers. 


The problems in our cities are well documented, and probably well known by you personally. According to the US Department of Education, 1.2 million kids drop out of high school every year. In the commonwealth that number is about 10,000 – a staggering 27 students per day. And the cost to taxpayers for each one of them over a lifetime, as reported by the Graduation Alliance (2017), is $417,061 (adjusted for 2022 dollars). That’s a whopping $4.17 billion for just one year’s non-graduates in Massachusetts alone. 


This is a problem that must be solved. If we can fix the dropout problem, we will eliminate the crippling taxpayer burden and improve the overall life and economies of our cities. That’s not to mention giving each kid a chance at developing a long and fruitful career with a good paying job in one of our businesses. 

 

We’ve traditionally looked to our public schools for these employees. But the public schools can’t do it alone, Dr. Aaron Jennings, the Diversity, Equity and Excellence Officer in the Chelsea Public Schools says. 


“School districts are increasingly looking for the nonprofits, businesses and community organizations with whom we can collaborate to help our students succeed and be prepared at graduation to take high quality jobs where they can contribute and thrive,” Dr. Jennings says.


The good news is that help is on the way. 

A New Era - November 14, 2022

Last Tuesday’s election in Massachusetts was historic, with voters electing five females to constitutional office, including Andrea Campbell as the first African-American female Attorney General and Maura Healey the first female elected governor of the Commonwealth.

Governor-elect Healey spoke of the historic nature of the election saying, “the people of Massachusetts have given a historic opportunity and a mandate to act.” She also promised to “make our state more affordable and competitive so that people will come here, stay here and grow their businesses here.”

The Governor-elect shares the same goals as AIM and our member businesses, ensuring that Massachusetts has an unsurpassed quality of life for its residents. These goals require collaboration and coordination to become reality at a time of growing uncertainty.

As Americans went to the polls last week the growing sense of economic uncertainty was evident with many voters saying the economy and worries of inflation were the leading issues on their minds.  This was the same week in which the AIM Business Confidence Index weakened for a second consecutive month and technology companies such as Twitter and Meta laid off thousands of workers.

The good news is that Governor-elect Healey ran on a message about the importance of teamwork. Keeping the Massachusetts economy strong and ensuring people can live, raise a family, make a strong wage and prosper will require everyone, government and businesses alike to work together as a team.

The Governor-elect also pledged to pursue a tax-relief package initially proposed earlier this year by Governor Charlie Baker, saying it ‘will absolutely be a priority day one.”

“I think it starts with looking at what Governor Baker proposed: tax relief for seniors, for low-income folks, for middle-income folks, for renters — also changing the limits for the estate tax and supporting things like the earned income tax credit,” she said prior to her election.

Both the current governor and the governor-elect have lamented the omission of permanent tax relief from the recent Economic-Development bill as Bay Staters feel the pinch of inflation. And as the new administration and a new Legislative session begin in 2023, AIM will work to ensure such relief is a priority.

However, to ensure an economy that is strong and continues to grow will require progress in a variety of areas, such as workforce, housing affordability, transportation and energy security. As we see health-insurance premiums rise next year, energy costs increase this winter and offshore wind companies seek to renegotiate their contracts in the face of inflation and supply chain disruptions, strong leadership will be key to meet these challenges.

AIM wishes Governor-elect Healey and Lieutenant Governor-Elect Kim Driscoll success in the years ahead. We pledge to work cooperatively to ensure a better quality of life for all Massachusetts residents.

Lastly, we are grateful to Governor Baker and Lieutenant Governor Karyn Polito and their entire administration for their steady leadership of the Massachusetts economy during the past eight years.

Talk is Cheap, Voting is Free - November 7, 2022

“Voting is the foundation stone of political action.”

Dr. Martin Luther King, Jr.

Dr. Martin Luther King recognized that participative democracy is an essential part of our identity. He went on to say that “our lives begin and end the day we become silent about things that matter.”

The sentiment remains true in 2022 as we approach Election Day tomorrow in Massachusetts and throughout the nation. The fractious nature of our current political debate makes it imperative for everyone to participate in an election that will give us the opportunity to speak and have a voice on the things that matter to us. It will give Massachusetts a new governor, a new attorney general and perhaps new members of the Legislature, setting our course for the future.

Many people have already made their voices heard through mail-in ballots or early voting. Tomorrow is the final chance to be heard.

Everyone – business owners, individual citizens, people with kids in the schools, retired people – has a stake in selecting the people who will represent them in government and the policies that will set a course for our quality of life and the future of our commonwealth. Elections have consequences for the business climate, tax policy, our energy choices, education and virtually every other aspect of life here in the Commonwealth.

One issue at stake in this election wiith consequences for employers is Question 1, the ballot initiative that would create a constitutional amendment increasing taxes by 80 percent on certain incomes. The initiative would apply to taxable income of more than $1 million on the sale of homes, investment, stocks, businesses, pensions, and inheritances.

AIM strongly encourages you all and your employees to vote “no” on Question 1 because it will harm the small, family businesses that form the backbone of the Massachusetts economy. Question 1 will prevent these employers from being able to reinvest into the business, prevent them from buying machinery and equipment and prevent them from providing competitive pay increases at a time of heightened economic uncertainty.

Remember that every election is determined by the people who show up. “If we don’t vote, we are ignoring history and giving away the future,” said global philanthropist and businesswoman Pat Mitchell.

“The best way to predict the future, is to create it,” said Abraham Lincoln.

We all have a voice in shaping the future of the commonwealth. Whatever your political leanings or ideologies, show up and vote to ensure your voice is heard.

Don’t know where to vote? The Massachusetts Secretary of State’s office maintains a web page that allows you to determine the location of your polling place.

See you at the polls.

Vote No on Question 1 to Keep the Economy Strong - November 01, 2022

The AIM board of directors voted earlier this year to join the NO campaign on Question 1 – the ballot initiative that would create a constitutional amendment increasing taxes by 80 percent on certain incomes.  Proponents of the measure claim that all of the money would go to education and transportation, but a careful reading of the language reveals that the spending would be subject to appropriation by the Legislature, meaning that any money raised by this language could be spent on any priority the General Court chooses and not the items enumerated in the ballot question language.

When the board authorized AIM to join the NO coalition, Executive Vice President of Government Affairs Brooke Thomson was designated as our representative to the group. Her thoughts on why NO is the best choice as a vote are below:

by Brooke Thomson

Like anyone else with a television this month I have been inundated with political commercials. Given the overload of information, I thought I would take a moment to cut through the noise and appeal directly to AIM members on the one issue on the ballot that AIM has endorsed this cycle.

AIM strongly encourages you all and your employees to vote “no” on Question 1 this November 8. Question 1, if adopted would amend the state constitution to impose a tax hike on income more than $1 million. This applies to all taxable income including the sale of homes, investment, stocks, businesses, pensions, and inheritances.

Of primary concern is the effect that Question 1 will have on AIM-member businesses organized as pass-through entities. These companies, many of them small, family businesses, will be punished for their success with higher taxes. Question 1 will prevent these employers from being able to reinvest into the business, prevent them from buying machinery and equipment and prevent them from providing competitive pay increases at a time of heightened economic uncertainty.

The scope of the proposal reaches far beyond households with more than $1 million in salary. Given the sharp rise in property values in Massachusetts, many middle-class families selling their homes will find themselves deemed “millionaires” overnight according to Question 1. Property ownership is the primary asset for retirees and the nest egg for families across the state. The tax hike proposed in Question 1 will affect many more Massachusetts residents than those you might envision as “millionaires”.

The Commonwealth has tried for years to shed the “Taxachusetts” label and Question 1 is a step in the wrong direction. In the wake of COVID, we have seen that people can choose to live and work almost anywhere. Competition for talent has never been greater. And if Question 1 is adopted, businesses will likely invest elsewhere for new projects and possibly reduce their workforces in the state. Massachusetts is already among the top 5 states losing taxpayers. That is not a list we want to be at the top of.  Passage of Question 1 will accelerate this trend.

Beyond the negative economic impacts passage of this ballot question, there is also tremendous misinformation circulating about how any money collected from the tax can be used. The proponents of this issue have long argued the revenue raised by the proposal will be designated to fund education and transportation, both noble causes. But the truth is that no such designation can be made. The money collected will go into the General Fund and be “subject to appropriation,” which means the Legislature may spend the new income on whatever it wants.

Lastly, Question 1 is alarming because it is a constitutional amendment. The state constitution in sacred and issues like tax policy should not be baked into the constitution. If Question 1 is adopted and we see businesses decamping and the economy suffering as a result, as I believe it will, we can only undo the damage via a separate constitutional change which will take at least four years if not longer, to accomplish.

Massachusetts will be stuck with the economic consequences of Question 1 for a long time.

For all these reasons and more, I highly recommend a no vote on Question 1. If you haven’t already voted using early voting please do so or vote in-person on Tuesday, November 8.

Mayor Wu Brings Unique Perspective to Her Job - October 24, 2022

Boston Mayor Michelle Wu has a compelling background that underpins an inclusive approach to managing the commonwealth’s largest city.

Born in Chicago to Taiwanese immigrants, Mayor Wu graduated from Harvard College and then worked as a consultant at the Boston Consulting Group. She returned to Chicago to care for her mother and two youngest siblings when her mother developed mental illness.

Mayor Wu started a teahouse business to support her family financially and experienced all the challenges of getting a small business off the ground. She later returned to Massachusetts with her mother and youngest sibling to earn a degree from Harvard Law school.

“I came out of that with a passion for really wanting to ensure that families…whose voices were not being heard, families that were walking into systems that were designed to help hospitals … like government offices where you’re supposed to come in and out with a permit to open a business to support your family  and improve your community …that the ways that my family felt unseen and unheard that I could try to make a difference,” the Mayor recounted during a conversation with 150 business leaders at the AIM Commonwealth Conversation on Thursday.

It is perhaps no surprise that the mayor’s approach to economic growth is suffused with a commitment to allow as many residents as possible to share in the city’s prosperity.

She understands that challenging workforce demographics require the city, like any large enterprise, to cast a wide net for critical talent.

She has championed the $4 million All Inclusive Boston campaign promoting small businesses and tourism in the city.

And in August, she spearheaded a new policy introducing diversity, equity and inclusion into the review process for large projects in the City of Boston. The policy is a nod to the successful “Massport Model” for development diversity that earned the AIM Latimer Award earlier this year.

Mayor Wu, like the CEOs to whom she spoke on Thursday, also knows the challenges of running a large enterprise. Less than an hour after speaking to AIM, she encountered raucous protesters as she provided an update on efforts to address the homeless situation in Boston.

“It was always put into my head, when you grow up get a job that pays well, is totally stable and won’t get you in trouble,” the mayor joked to the AIM audience.

Thanks to Blue Cross Blue Shield of Massachusetts for hosting the Commonwealth Conversation and for sponsoring the event along with Uber.