Taking care of Business

When reformers talk about “shared responsibility”, they’re usually referring to three entities who do the sharing: the individual consumer, the government, and employers. Up ’til now, I haven’t had much luck getting the employer side of the story. I have called numerous small businesses around Western Massachusetts, as well as chambers of commerce, and most have either declined to be interviewed, or failed to call me back, or left messages that say, essentially, no comment. So I decided to go up to the top — to Rick Lord, the president of Associated Industries of Massachusetts, which represents about 6,000 employers in the state. Lord was active in designing the health reform law, and now, as a member of the Connector Authority, he’s active in implementing it. He has been quite vocal about the needs of business, and he was very agreeable to being interviewed.

Not surprisingly, Lord takes issue with those — and there are many — who say business hasn’t had to pay its fair share towards health reform. He points out the state-verified statistic that Massachusetts has a 72 percent rate of employers who provide some health insurance to employees, which is higher than the 60 percent national average. And that’s up a few percentage points since before health reform. Since the individual mandate, 159,000 more employees are taking the insurance their employer offers — and he says that has cost businesses across the state about 500 million dollars.

However, he also admits — with no apology — that the business lobby in Massachusetts has been very clear that the costs of health reform should not be born disproportionately by employers. He fought, successfully, against a payroll tax to help pay for the state health programs. And with then-Governor Romney’s strong support, the employers with ten or more employees are subject to what most people believe is a fairly modest penalty when they do not offer health insurance: $295 per employee, which is considerably less than it would cost to provide health insurance to those individuals.

The burden on business has gone up slightly since the reform law passed. At first, businesses could get out of the penalty by either offering to pay 33 percent of health premiums, or getting 25 percent of employees to buy into the plan. Now, they must meet both those requirements. But Lord says he would not support any additional burden on business — and he added a reminder that one of the reasons Massachusetts passed a reform where other states did not, was because the business community supported it.

Initially, the state hoped that penalties on businesses not offering insurance would bring in about 47 million dollars; instead, during the first year, the amount was closer to 6 or 7 million dollars. Lord says that’s because the state overestimated the benefit. He acknowledged that, in some cases, businesses have wiggled out of the penalty by breaking up into smaller entities or relying on temporary and part time staff that don’t need to be offered insurance. But he does not believe that’s a widespread practice.

Nor does he believe that businesses have left Massachusetts — or chosen not to locate here — as a result of health reform.

I asked what he thought the rest of the country could learn from the Massachusetts example. He believes the coalition model — bringing business into the fold, getting employer support — is key. He also thinks other states should probably work on the cost issue at the same time as access, unlike Massachusetts, which dealt with access first and is now grappling with cost.

I was also curious what he would think of a single payer system — since presumably employers would benefit by not having to spend money on employee health insurance if the government was taking care of that. He is NOT, however, a fan of single payer, because he expects single payer would be paid for with higher taxes, including taxes on business.

It’s also worth noting the many businesses that are involved in the health insurance industry … would of course be put OUT of business with single payer.

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