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Massachusetts Business Leaders Have a Message: A Health Care Law Can Work

By Jane Norman, CQ HealthBeat Associate Editor

September 13, 2012 -- A health care overhaul that brings business and politicians to the same table for debate, negotiation, and ultimately successful legislation sounds like a deal forged in never-never land.

But Massachusetts business leaders said at a forum at Georgetown University this week that it really did happen that way in their state, and that their 2006 law has been good for the business climate as well as the newly insured.

"We were willing to compromise when we had to, without giving up on our core values," said Richard C. Lord, CEO of the Associated Industries of Massachusetts.

And while acknowledging the opposition by some national business groups to the federal health care law, the Massachusetts leaders said they strongly believe it's in the best interests of business to be fully involved and engaged as implementation continues throughout the country.

Lord, as well as the heads of the Greater Boston Chamber of Commerce, Massachusetts Business Roundtable and Massachusetts Taxpayers Foundation, have written a report on their experiences in helping to develop the state's health care law, which was a model for the federal overhaul (PL 111-148, PL 111-152).

When they are invited to speak to employers and business groups in other states about their involvement helping to pass the Massachusetts law, "we are often met with a strong dose of skepticism," they wrote in the report. But they came to the realization that having large numbers of uninsured people is costly and damaging to a state's economy, they said.

"While every state faces different challenge, we are convinced that many aspects of our experience with health reform and what we've learned from it can be applied elsewhere," they added. The report was funded by the Robert Wood Johnson Foundation, Blue Cross Blue Shield of Massachusetts Foundation, and Community Catalyst.

The Massachusetts law is far from perfect, and a major challenge remained afterward in addressing rising health care costs, the leaders said, though they added that state lawmakers are working on new payment systems and other solutions for curbing costs.

Lord and others spoke at a forum last week at Georgetown's McDonough School of Business. The idea was not to debate whether or not the federal health care law is a positive, but rather to use one case study in which a change in the health care system has been implemented and look at how business played a role, said David Thomas, dean of the business school.

In Massachusetts, according to the report, the most recent statistics show that 98 percent of residents have health insurance coverage, including virtually all children—99.8 percent. In 2010, 77 percent of Massachusetts employers with three or more employees offered health care coverage, compared to 69 percent nationwide.

In Massachusetts, as nationally, the "key building block" in the law was the requirement that every individual should have health insurance, said Michael J. Widmer, president of the Massachusetts Taxpayer Foundation. But acceptance of that concept may have been a little easier in Massachusetts because there was already a high degree of employer-provided coverage there and thus an existing tie between work and health insurance, he said.

Yet there was a problem with many young people turning down offered coverage because they didn't want to pay for it or couldn't afford it. And businesses that did provide health insurance coverage were frustrated with those that didn't, because health care costs for their workers wound up being paid by everyone, the leaders said.

As the national law envisions for every state, the Massachusetts system features a health insurance exchange, called the Connector, that's been the body administering state-provided subsidies for low-income people to purchase coverage. Businesses have roles on the governing board of the Connector.

Each Massachusetts business that either doesn't offer health insurance or offers plans deemed unaffordable is assessed $295 per employee. The assessment is considered to cover the cost to the system of uncompensated care.

"The results have been dramatic," said Widmer, pointing to the 98 percent coverage figure. In addition, the five-year additional cost to the state budget has been just 1.4 percent, he said.

Health insurance legislation actually first was approved in 1988 in Massachusetts—and then later repealed, in large part that was because of a lack of involvement by the business community, forum participants said. Jack Connors Jr., the former chairman of Partners HealthCare and the ad firm Hill Holliday, said that by the mid-2000s, businesses felt that health care costs were spiraling upward and there was little control over their growth.

Lord said that then-Gov. Mitt Romney and legislative leaders sought the involvement of the business community as the new health care measure was shaped, and consulted with business group leaders about what they thought their members could accept. Romney, now the Republican nominee for president, signed the Massachusetts law. He now says he would repeal most elements of the federal law and replace it with his own plan.

In Massachusetts, Lord said, the open door for business was key. "I saw that as a very important part of the negotiations leading up to the bill," he said.

He said that soon after the federal law was enacted, he was invited to meet with a business group similar to his own, and members expressed "total surprise" at his support for the overhaul. But he said he tells groups that the Massachusetts concept was based on the familiar employer-based system rather than some "radical" approach.

"I don't see it as we rebuilt our health care system as much as we plugged the gaps," he said, including the use of subsidies to extend access to care for the uninsured.

Forum participants said fears that business would suffer proved unfounded. Linda J. Blumberg, a senior fellow at the Urban Institute, said her research has found "absolutely no evidence that the Massachusetts reforms had any negative impact on employment at all." In addition, Blumberg said her research found no sign of reduced employment among small employers and employers in retail or hospitality, those who might have to offer health insurance for the first time under the overhaul.

The state law made the business climate better in Massachusetts, the leaders said. "With universal access, and building off the employer system, I think many business leaders would say we have a competitive advantage in having this degree of coverage," Widmer said.

Businesses face pressures to be accountable, and they felt they were paying too much for a broken system, Connors said. "People appreciate the fact that there's greater accountability today," he said.

The report acknowledges that the process of creating the law was "long and difficult." But business leaders, even when frustrated, stayed at the negotiating table to work out solutions. For example, the $295 figure for uncompensated care was arrived at when business originally had proposed a fine of $30 and some lawmakers wanted it to be as high as $600 or $700, forum participants said.

Since the 2006 law was enacted, Connors said his biggest surprise is that it's been "so vilified" by opponents. And Widmer said it's the fact it was implemented at all that's still surprising to him. Despite the differences, among all parties "there was a larger commitment to succeed," he said.

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