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The Expert View
Expert View: Richard C. Lord
Richard C. Lord


Richard C. Lord
Sky Still in Place After Massachusetts Reform

By Sandy Graham
Photograph by Erik Jacobs

EDITOR’S NOTE: Richard C. Lord is president and CEO of Associated Industries of Massachusetts, a 95-year-old association of 6,500 members representing all types and sizes of businesses. Lord also holds the small-business seat on the Commonwealth Health Insurance Connector Authority Board, created by Massachusetts' landmark health care reform act of 2006. The legislation requires almost all residents to have insurance that meets certain minimum standards, a requirement known as the individual mandate.

Is the Commonwealth Health Connector Authority like Massachusetts' equivalent of Consumer Reports or Underwriters Laboratory for health insurance plans?

We're a little of both. The Connector administers the subsidized insurance program for people with incomes up to 300 percent of the federal poverty level and who don't have access to employer-sponsored plans. That covers about 180,000 people. Then, the Connector offers nonsubsidized health plans to which we give our seal of approval. The Connector Authority also was given certain policymaking powers under the reform bill. For example, we have responsibility for determining the minimum level of coverage that consumers must purchase to meet the requirements of the individual mandate. In that regard, the board specified that prescription drugs must be included in minimum coverage, adding more than 100,000 individuals who previously had been purchasing plans without a prescription drug benefit.

Does Associated Industries of Massachusetts (AIM) consist of mostly small employers?

No, it's pretty diverse in terms of size, industry and geography. Our members include Raytheon and Fidelity as well as companies with just one or two employees. We do have a lot of small employers. At the request of Gov. Deval Patrick and former Gov. Mitt Romney, I was happy to serve as the Connector Authority's small-business representative.

Have AIM members struggled in recent years to provide employees with health insurance?

We survey our members every year. Virtually all of them provide health insurance and did prior to reform. Statewide, the share of employers offering insurance increased after reform, although the penalties for failure to do so is relatively modest, only $295 per employee per year. I believe more employers offer health insurance to be competitive and attract the kind of employees they want to attract.

Costs have been going up at double-digit rates really for the past 10 years, at least for most small employers. It has escalated even more this year. This has nothing to do with reform. Massachusetts' health care reform in 2006 did nothing to address costs; the law was about access. And from that respect, it has been very successful. Roughly 97 percent of Massachusetts residents have health insurance now. But we didn't address costs, and that's haunting us now.

Have your member businesses had to drop health care coverage, reduce benefits or increase employee premiums?

They're not dropping coverage, but they are taking steps to pass on more costs to employees. Our benefits survey, published in March, found that 44 percent increased plan deductibles last year and 26 percent did so this year. The employee contribution to health insurance went up at 42 percent of businesses last year and 37 percent this year. Prescription copays increased at 37 percent of businesses last year and 19 percent this year.

How has insurance coverage ranked as a concern among your business members?

Every other year, we do another survey of members on public policy issues. The cost of health insurance has been the No. 1 concern for the past six or seven years, followed by the cost of energy.

In the national debate, there was what some might describe as "Chicken Little" hysteria over what reform would do. Since Massachusetts' 2006 reform bill, has the sky fallen there?

There was a lot of concern here that there would be a public backlash – about the individual mandate, in particular. But there was a huge public campaign that explained why having health insurance was a good thing and why reform was good for the Commonwealth of Massachusetts. We kicked it off at Fenway Park during a Red Sox game. And you know what? There was no public backlash.

On the business front, AIM also conducted an employer-education campaign about state reform. Frankly, what was very different here than in the national reform debate was that almost all the various stakeholders were on board with this. When it came time to implement, everyone worked together.

I hear it's hard to find a primary care provider in Massachusetts since reform.

There are long waits for appointments, but the shortage of primary care providers isn't just here. We have to increase the supply nationwide.

What about consumers – are Massachusetts residents getting healthier?

Certainly residents now have access to preventive and primary care, but I don't know that we can say overall health has improved. That's more down the road.

How will federal reform affect Massachusetts, particularly its business community?

Since Massachusetts has been the model for many of the major principles that encompass federal reform, we don't expect change to be as dramatic here as in the rest of the nation. There will be some change, now and later, as the rest of the country ramps up and develops insurance exchanges much like ours here at the Health Connector. This year, some small businesses will be able to qualify for tax credits if they contribute at least 50 percent of their employees' health insurance premiums. Down the road, penalties in the federal bill for individuals' and businesses' failure to comply with its provisions are different than Massachusetts' penalties, so our lawmakers will have to look at that.

What's your frank assessment of how reform has worked in Massachusetts, both in general and as far as for your members?

I think it worked very well for what it was intended, which was to provide access to insurance for people who didn't have it. Again, however, it did not address the cost of health insurance or the cost of health care.