 I want to welcome all of you this afternoon to an exciting panel. We're delighted to see all of you. And more than that, we're really excited to welcome our colleagues from Massachusetts. When we titled this session, Massachusetts Comes to Michigan, we weren't really thinking that they might have the worst storm of the century. They weren't coming. They kept saying, February of Michigan, who's going to ward off? We are thrilled that they're here. It's obviously a very important time in our state's dialogue on health care reform for them to be here. So we know that you will appreciate their comments, their perspective, the opportunity to hear a little bit about what happened in Massachusetts so we can be prepared in Michigan. And just a couple of words about the importance of the timing of this event. For those of you who were not aware, like in his budget announcement, Governor Snyder made a recommendation to expand the Medicaid program in the state of Michigan. But in that announcement, we've heard from some of the legislature who have some questions who aren't totally comfortable with that recommendation. And in earlier discussions that I had with the governor's staff, because he was really looking for a lot of facts and you can go to our website. And I think we gave you some information about issue briefs that we put out about the impact of Medicaid expansion in the state of Michigan. He really made a plea for the business community to get engaged. And so this could not be more timely because it really is going to be important for the business voice to be heard as we talk about health care reform. Michigan, even with the governor's support of a health insurance exchange at the state level, has not yet been successful at getting that through the legislature. So there's still lots of dialogue to be had in our state about health care reform and about the views of the business community. So this is a very timely and important session to have in that context. I want to do a few thank yous. And then I'm going to turn it over to Todd Buckmuiler, who is going to moderate here because I want to really get straight into the session. I want to thank Barry Rabe at close up here for cosponsoring with us and all of our cosponsors at the Ross Business School, at the Griffith Leadership Center at the School of Public Health, at the Institute for Health Policy and Innovation. And we are just in the Ford School, of course. We're just delighted to have all of you as cosponsors and appreciate all of your support. I want to specifically thank Community Catalyst and Robert Stucia, not only for making the trip out here, but really for putting this together. It's been fabulous to work with you and your team on this journey. And I want to thank David Adler at the Robert Wood Johnson Foundation for financing and supporting the Massachusetts team here to share their story in many different locations. We think it's really going to be important and helpful. So thank you all for coming this afternoon. It's going to be an exciting opportunity for dialogue. And it's going to be very much about dialogue. And I am going to turn it over to Tom from the Ross Business School here, who is going to kick it off and moderate the session. Not only pulling this session together, but really making sure our force for helping the university contribute to the health policy discussion. It's really been great working with her. Because of the similarities between the Massachusetts Health Care Reform and the Affordable Care Act, there's obviously been a huge amount of interest in the Massachusetts experience among health policy researchers and analysts. So there's been a lot of interest in understanding how the individual mandate works, learning about the connector, learning about the way they expanded the Medicaid program. I think there's been less attention on the role that the business community plays. And that's a really significant oversight. When you think about the fact that in the US, nationally, over 90% of people with private health insurance receive their insurance with the workplace. So employers for a long time have played a really central role in financing health care. And I think they're going to continue to. So it's really important that we understand how Massachusetts employers influence the development and implementation of the legislation. And then, to date, what has been the effect on the business community? So we're really happy to have with us, from Massachusetts, Rick Lord and Mike Widmer. Rick is the president and CEO of the associated industries of Massachusetts. And Mike is the president of Massachusetts Taxpayers Foundation. And as I said, I'm looking forward to hearing from them about their experience in the development of this legislation and how they collaborate with their stakeholders and their take on where things stand today. And then, representing the home team, we have from the Ford School and ISR, Helen Levy, the health economist, and Rob Fowler, who is the president and CEO of the Small Business Advantage of Michigan. And so in addition to providing a Michigan perspective, the each point of view, Helen can tell us about the economics of the Affordable Care Act and the poor response for insurance. And Rob can provide the small business perspective. But Mary Ann said, we'd like this to be very interactive. We'd like to have lots of questions from the audience. I'm going to start it out with some questions. And then after a few minutes, we'll open it up and there will be microphones that we go around. So Mike, I thought I'd start with you. And maybe you can provide us some background about the reform and tell us why the business community got involved the way that it did. Thank you, Tom. It's a real pleasure to be here today. Terrific turnout. So thank you very much for inviting Rick and me. In the mid-2000s, around 2005, there was a major effort that was begun around health reform driven by John McDonough, who was at that point head of the Consumer Advocacy Group Health Care for All. He then went down and worked for Senator Kennedy in Washington. It was part of the discussions that led to the ACA. As the issue was ripening in Massachusetts, really four business groups came together to participate in the discussions and the legislative consideration of the issue that had been put on the table initially by then Governor Romney. And the four groups were AIM, Rick, myself, the Taxpayers Foundation, the Greater Boston Chamber of Commerce, and then the Massachusetts Business Roundtable. And we began to engage together around this issue. I think there were two things that were driving our participation broadly. One is, I think we all agreed, as individuals in our organization, that it would be good if we could achieve universal health care in Massachusetts. So that was a positive thing. In a human sense and also, I think we fell from a broad competitive point of view, we already had a high level of employer coverage. If we could have universal coverage, that would actually be a plus overall for the state and the state's economy. At the same time, I don't want to suggest that we are just pure. There was a lot of self-interest. For example, there was a proposal in the House for a new large payroll tax on employers. And we thought that was a bad idea, all of us. And so we fought very hard against that particular provision. But at the same time, we stayed at the table broadly defined. It wasn't as if we were all, I mean, the four groups were, but not all the other groups meeting. But we stayed at the table through the very long months of the negotiations and stalemates. And ultimately, we played a central part in brokering the deal around the employer piece of the mass health reform. And so I think we feel very good about the fact that the final piece of legislation, everybody compromised. But it's a good piece of, very good piece of legislation. I've been around Massachusetts government and politics for 35 years. And I would put this up in the top one, two, or three pieces of legislation in any area that has been passed in that period of time. And then the key is it's been implemented well. We all know experience of legislation that was sound on paper and then implemented poorly. This piece of legislation itself had, I think, the right incentives in place. And then the implementation has been done very well. I think the key couple of points, one is that the key to the success of all of this has been that the stakeholders have continued to work together even when we have disagreed. So in the legislative process, there were major disagreements among the various constituencies and stakeholders and then subsequently in the implementation as well. But we all made a commitment, providers, insurers, consumers, business, to try to work through it. And we have successfully. And finally, one key point in terms of the success of mass health reform, it's so basic that I think it often gets lost. And that is the individual mandate, which was a new, I mean, it actually come out of the Heritage Foundation and others in the early 90s, but nobody had ever implemented it on the scale that Massachusetts did. The intersection of the individual mandate and the high level of employer coverage was the key, has been the key to success. So that many of the previously uninsured individuals who turned down an employer offer with the individual mandate then accepted the employer offer. So greater responsibility assumed by employers, but in a market sense, not in any government requirement of an employer mandate, rather the individual mandate intersecting with a high level of employer coverage, the Urban Institute did a study before. It said this is the most efficient way to do it. And that's what happened, and that's been the key success to the reform. So we have a shared responsibility of government, employers, and individuals. Thanks. Rick, I wonder if you could tell us, I'm sure that you must get lots of calls from people around the country asking about the master's of the story. In particular, what do you tell those business leaders that are maybe skeptical about their points? Well, at first I tell them that we're really not crazy in Massachusetts when right after this past, particularly in 2006 and 2007, Mike and I and others did get invited to speak to a lot of groups around the country. And they would look at us, obviously, very skeptically. Of course, this was all very new territory then. And I would say, why did you possibly agree to support the Massachusetts law? And I would say, kind of what you, Tom, said at the beginning, well, you know what, Massachusetts employers, all employers in the United States, we provide the vast number of people who have private coverage with their health insurance. We're the biggest purchasers of health insurance for private sector employees. So why wouldn't we want to be at the table if we were going to talk about reforming our health care system, which, other than payroll, is for many businesses one of their biggest expenses. So we had kind of said, yeah, for all the other reasons, Mike cited that we needed to be at the table. And if you're at the table, you get to shape the outcome. The legislature and our governor really wanted to understand our perspective in this whole debate. They really wanted our support. Many of them had been around in 1988, when under Governor Mike Dukakis, we actually tried to pass our first universal health care law. We actually did. And then we hit a bad economic stretch. Mike Dukakis ran for president and lost, came back very unpopular. We elected Governor Bill Welder, Republican, who vowed to repeal the law. And the business community never supported it to begin with and was instrumental in making sure that it got repealed. So for people with long memories, they said, you know what, this time around, let's see if we can get the business community support. And so they sought our support and the opportunities to work with us and to get our input. So that's what I say. Why wouldn't you want to be at the table and help craft what it looks like? And I would say equally importantly, and as Mike again alluded to, we've seen many examples of laws that gets passed and then implemented very poorly. So we all stayed there working with all the state agencies and the connector, which is our version of the exchange, to make sure this was rolled out in a way that the business community could support. So I actually saw a huge advantage for all of us to be there, both at its inception and then its implementation. And I think it made a big difference. So maybe for both of you, I could follow up and looking back and maybe looking past the areas where there was agreement, there must have been cases where there was heated discussion and where there was disagreement and maybe being at the table wasn't so comfortable. Are there any examples you want to talk about that would give the sense of how you work for them? Sure. The issue of the employer responsibility was obviously part of the whole debate. I alluded to the fact that we were opposed to an employer mandate. The House essentially had an employer mandate in their proposal and with a large payroll tax. And even though all of the large employers, medium-sized employers, offered health care, there was a strong sentiment that requiring it as a mandate was not helpful to the state's competitive position. We're already a high-cost state and so forth. So the House passed their bill. The Senate did not have an employer mandate. And for months, they were at loggerheads. And basically, the question was, well, are we going to be able to achieve reform? Behind the scenes, the four groups I mentioned and a couple of others, we're working to try to figure out is there a way to kind of thread the needle here? And so we came up with an alternative to what became the fair share assessment, which is widely misunderstood, even in Massachusetts and certainly across the country. The fair share assessment is essentially a $295 per employee per year assessment on employers who don't offer health care coverage or offer limited health care coverage. The point was their employees were still showing up at emergency rooms and getting free care. And so we said, all these things look easy in hindsight, but it took, I mean, it was one of those things. Yeah, we worked through and said, wait a minute. It's not fair that their employees get a free ride, if you will. Other employers are paying part of that. The taxpayers are paying part of that. So we will have an assessment, $295 per year per employee on employers who don't offer health care. That was the average. So you don't go into each employer disguised who's taking advantage of free care or not. That was the design that broke the log jam. But I can't describe the intensity of what happened before all of that. We had meetings upon meetings with a house speaker with whom we had good relations, all of us. But he was out front in the payroll tax and we weren't. And so there were lots of negotiation, lots of collisions and so forth. Obviously, the consumer groups had a different point of view. So that, I think, is one of the principal examples of where we played a very constructive role in the legislative process in breaking the log jam, but in a way that we felt was important for the competitive position of Massachusetts going forward. So that was a very contentious and fun debate to be part of. But I also think it showed, particularly the speaker, he did really want the business community to support this law at the end of the day. So the reason we had 25 meetings with him over the course of three months is he wanted to see if we could reach some consensus that we could support, which I give him a lot of credit for. So one other incident that I was involved in, our connector authority, which again is our state exchange, was given the responsibility to determine what minimum creditable coverage is. So if you think about it under the ACA, what the essential health packages was given to the connector authority to determine. So our connector authority was governed by a 10-person board. There's one business seat. So Governor Romney, who was governed at the time, appointed me to that seat, and then Governor Patrick reappointed me. So I was actually served in that role for four and a half years with a variety of other people. So on that board were a variety of interests. There was a consumer representative, a healthcare economist, a benefits specialist, several people from state government. So diverse group of opinions, a union person. Because we were a public body, every time we met had to be in public, so we'd be in rooms like this and the 10 of us would be sitting here and hundreds of people would be watching, including reporters and the media. So imagine debating something contentious like that. What is that benefits package gonna look like when the advocates are over here and the business people are over here and they didn't agree at all so we had a lot of contentious meetings but I felt like the 10 of us kind of bondage through this experience because we felt like she's the eyes of the world are on us, or at least the eyes of the 200 people that were groupies and following everything we did. And we really wanted to make this work. And so we somehow found a way to compromise and I didn't necessarily wanna mandate that prescription drugs were included in the minimum benefits, not because I didn't think they were part of good healthcare but 150,000 people in Massachusetts didn't have them so that was gonna automatically increase their premiums by 10 to 15%. The healthcare advocates didn't like high deductible plans because they thought they put too much cost on consumers but we had a lot of members that were offering those types of plans so debating all this publicly was a challenge and yet at the end we all kind of compromised and did agree 10 to zero what the minimum credible coverage package needed to look like which got even the attention of the Wall Street Journal which wrote a front page story and said how 10 people are changing the landscape in Massachusetts so it was pretty cool. And I think, and I still, I don't serve on that board of the connector now but I do have to say the people that served there were willing to compromise not their core beliefs but enough to say, you know what, we gotta meet in the middle and make this happen and we're gonna do it and it was a pretty neat experience. I think one of the challenges in trying to draw lessons from one state and apply them to another is disentangling those things that are really specific to that state and those things that are more general and how I know that you've done research on employer-sponsored insurance and then worked in Washington on implementation of the ACA. I wonder if you could say a little bit about how you see the Affordable Care Act affecting the business case for employer-sponsored insurance. Yeah, thanks Tom, that's a good question and actually I wanna pick up on something that Mike mentioned about the fact that most medium and large employers are already offering insurance and you know if you think about it why are we talking about the role that business is playing because it's not obvious why businesses are in the game of insurance in the first place but the reason they are is that two reasons, one is employer-sponsored health insurance and I think most people probably know this employer-sponsored health insurance isn't taxed as income to the employee so if I go out and buy health insurance as an individual I have to do that using after tax income but if I get as I do insurance from the University of Michigan I don't pay taxes on that approximately $12,000. So that's a big advantage for me as a taxpayer getting my insurance through my employer and of course the other piece of it and this is where things start to look different for large versus small employers is that large employers have a big advantage in having a big pool of relatively healthy people that they can offer insurance to and avoid an adverse selection problem that is to say avoid getting all the sick people whereas for smaller employers there's a different dynamic. So one of the things that's interesting to me as we think about the Affordable Care Act and how it affects employers is to think about the incentives of different employers and what are the concerns that they are bringing to the table with them given the different comparative advantage they have in the insurance market and given the different provisions of the law. So for large employers and the definition of large in the Affordable Care Act is 50 employees. It's actually smaller in Massachusetts. You guys I think call a large employer 10 for the purpose of the assessment but for the insurance reforms it's 50 and fewer. Okay but the assessment is... Assessment is 11 or more, yep. So in the Affordable Care Act it's 50 or more and by the time you get to businesses with between 50 and 99 employees 95% of them are already offering health insurance. So that group I think faces one set of issues with the Affordable Care Act and then small employers who currently have difficulty you can't offer the same set of benefits. Anybody who's ever considered taking a job at a small firm let alone try to run a small firm knows that you can't get the same set of benefits with a small employer group that you can with a large employer group. So when I think from a theoretical perspective about the issues that businesses are bringing to the Affordable Care Act it's really two sets of issues different issues for small employers and large employers. So let me, in a minute I want to open up a question. So we have some mics that are gonna go around if you have a question just to raise your hand but while we're getting that set up I wanna follow up on this distinction between small and large employers and Rob sort of ask you from the perspective of small employers actually I have a two part question for you. First of all, what do you think small employers in Michigan are most concerned about looking ahead? And secondly, maybe put you on the spot a little bit. You were at a press conference last week where you came out supporting the Medicaid expansion. I wonder if you could sort of talk specifically about how you see that issue affecting business in Michigan. Well first thank you Tom and thanks for the opportunity to be here. Being called the home team here at the University of Michigan makes me a little uncomfortable. I had to put that out there. I'm delighted to be here with my compatriots from Massachusetts. We've been admiring and studying what you did in Massachusetts for some time. I see some of my friends in the room who I sit around the table worrying about the issues the uninsured for a number of years and so we've been admirers at times and we've scratched our heads at times to try to figure out what you were thinking in Massachusetts. That's it. So I think the issue for small business and this was true before all this started and frankly I've been advocating for small business for almost 30 years and sadly it's the same issue that it was 30 years ago and it's cost. That is the issue for small business. It's a, I remember when this used to be called the fringe benefit and there's not much fringy about it today, it's a major cost of doing business and sort of to the question Helen answered a minute ago, why do employers provide health insurance? Well I don't, it may be, the blow may be softened by tax treatment but the reality is you do it in order to attract and retain employees to make your business competitive. That didn't change. That was true before. It's true after. What's changed is the cost of health insurance has become too big a burden for a lot of companies to bear and I think they've had to make very, very difficult choices along the way about whether I can even compete not offering health insurance to my talent. So the issue for us is cost. Now let me try to connect that to Medicaid expansion. It's interesting, it's been mentioned already but the reality is people get health care. If you get hit by a bus and you go to the emergency room you get health care and if you can't afford it you still get health care. If you come with no coverage at all you get health care. That turns into uncompensated care in our health care system. So in a hospital that's uncompensated care and they pass it along to their paying customers. That's the way it works. It finds its way into the base costs. If you wanna know why aspirin costs seven bucks this is one of those reasons. It's cost shifted to the paying customer and it's a terrible way to do business. Taking an increasing expense and shifting it to a decreasing group of payers who are struggling every day to continue to pay that cost. That is a terrible way to do business and that's been going on for a very long time. It's one of the biggest drivers of health care costs today for small business, for all business. For all premium payers is cost shifting. If those people who came to the health care system without payment had payment attached to them and in the case of Medicaid expansion that means a billion and a half to $2 billion a year in Michigan, if a billion and a half to $2 billion worth of payment came along with the cost of care, we think that cannot do anything but have a beneficial impact on rates for the rest of the people who pay the bills. That's not altruistic, that's pure math. That's the reason we support it is because we believe it's good for our members and for those who continue to pay the cost of health care. Without that, I would say, generally speaking, we did not support the ACA. We saw that there were some good pieces and some bad pieces but on the whole we didn't support it. But one of the principles of the Affordable Care Act is everybody in. If everybody's in the system, if everybody's paying, if people can actually sit on the sidelines and wait until they're sick and then come in and bring their cost to the health care system and sort of shift those costs to those people who are in the system and paying, that is an unsustainable model. So individual mandates, something we've supported for a long time and if we're gonna have a Medicaid system for the people who are poor then let it pay for those who are eligible for it. And then if everybody's in, the cost can come down for everyone. At least the upward pressure comes down on everyone. That's why we support a Medicaid expansion. Okay, well, why don't we open it up to questions from the audience? If you'd like to ask a question, if any of our panelists just raise your hand and we'll bring their mics back. I'm wondering how you handled the question of abortion and birth control costs in the package of substitutes. You know, I don't even know. Um, yeah, very carefully. Um, yeah, I actually think the legislature had already mandated that prior to us taking up, you know, health care reform. So it was already in there and it didn't come up in any of our discussions as we were deciding what the essential benefits package was. So, I do think there's a, there is a religious exemption of some sort, but it wasn't part of our discussions, which I'm happy about. Yes, to the folks from Massachusetts, you're probably aware of the Wall Street Journal editorial late last month about costs in Massachusetts. It sounds ghastly to me. The reading from the editorial, it said that health care was 23% of state costs in 2000, 25% in 2006, and it's now 41% for 2013. And then of course, as you probably know from having read the editorial, Deval Patrick is, as of this moment, I guess, proposing a billion dollars in tax increases in Massachusetts. What does that say about holding down costs with the Massachusetts-type system? Well, the editorial would be ghastly if it were true. Let me peel that question apart. When we passed universal access, we understood that that was phase one of dealing, reforming health care, and that we would need a phase two dealing with costs. We had faced, like every state, just about every state, escalating health care costs for years and years and years preceding our health reform, and then after health reform as well. So it wasn't, health reform was not the cause. So we have, we all came together, the stakeholders, and passed a major cost containment bill last year, which is quite comprehensive and was quite contentious. I won't get into the details at this point, but we can talk about it later or afterward. The important point, though, is that we already, in Massachusetts, were bringing down the rate of growth of health care costs. Not simply a matter of the recession, obviously that dampened utilization, but through our combined efforts of the providers and shores and business community and consumers moving toward global payments and reforming our entire system, we had seen our hospital costs, for example, which were growing 10% a year, go down into the low single digits. So we have been successful in controlling our health care costs, not to our full satisfaction, but at least a start. The other piece of the editorial, and the one that is faulty, well, the whole editorial was, it ties to the spending in the state budget. Our number one role in Massachusetts Taxpayers Foundation is as a fiscal analyst and watchdog over state and local finances. So we've put together a couple of reports, and this is the most recent one, April, 2012, Massachusetts Health Reform spending, an update on the budget buster myth. The issue of the cost of Medicaid growing and consuming more and more of limited state dollars is something that has bedeviled Massachusetts for 25 years and most of the other states in the nation as well. So the numbers that the editorial referred to, and this part was semi-accurate, in terms of the percent of the budget growing from the low 20s to the high 30s over about a 15-year period relates to Medicaid, the Medicaid program. Health reform has added only a very small portion to that cost, and that's what the conclusion of this report says. It's on our website, masstaxpayers.org. The governor's tax, the last point, the governor's tax package that he's proposing is not to pay for health reform and really has no connection whatsoever to health reform. It's to pay for principally investments in transportation and education. So that's the focus of his initiative. Despite the fact that there is an overwhelming democratic legislature, his proposal, in my view, will be scaled back dramatically if it's passed by the legislature. But in any case, it has nothing to do with health reform. If I could just add to what Mike said, too. As Rob said, before we did our reform, healthcare costs were the number one concerns of the members of AIM. They were growing it greater than the consumer price index and just continued to be a challenge for particularly small employers to pay for health insurance for their workers. We did say when we passed our law, we all said we'll be back to address costs because this was about access. In 2006, we couldn't reach agreement on doing the whole thing. So we agreed we'd be back. We did pass this big cost containment law last year. We have set a target to reduce healthcare spending in Massachusetts to the growth of our state economy. So this year we have a target for our healthcare spending not to exceed 3.6% if we're successful that will be quite different than what we have experienced in recent years. So we are serious about costs, but as Mike said, our healthcare costs, it was medical inflation and a whole lot of other reasons that were driving the cost even before the reform. And the fact that healthcare is such a big percentage of our state budget is reflective of the growth in our Medicaid program, the downturn in the economy and a lot more people signing up for the Medicaid program. Our budget actually has shrunk during those years, but the percentage dedicated to Medicaid and other safety net programs has grown. So for a lot of reasons that percentage does, I mean it's worrisome just to look at it, but it's not attributable to our reform, what per se. If you could identify yourself. Sure. I'm Chuck Haddon. I'm president CEO of the Michigan Manufacturers Association. I'm drawn to some interesting conclusions that I'm sitting here listening to you and I guess I wanna ask a couple of quick fire questions. You're a good sized state, population wise, pretty equal to us. With a major city, how competitive is your healthcare? How many companies come in and was it before, how competitive was it before and how competitive is it now? How competitive in terms of the companies? A number of companies are insurance companies, yeah. There's also the hospital side. Yeah, insurance side. Yeah, so yeah, it's competitive. We're a little probably different, well maybe we're not that much different from Michigan. We have pretty much five homegrown, not for profit insurers. Blue Cross is the big one. How much market do they have? Yeah, a little less than half I think and then we have four other non-profit insurers that are headquartered in Massachusetts that share the rest of the market. The national insurers like Cigna and Aetna and others have only a small percentage of the market but and that hasn't really changed at all since 2006. So they're all players to about the same extent they were. Hi, I'm Locke McCabe with Shepherd Advisors and I'm impressed with a number of folks that participate in the Massachusetts program and I'm curious to whether, particularly for smaller employers, having that level of participation has really sort of leveled the playing field from a talent attraction perspective. In what ways do you see the Massachusetts program having really helped smaller companies? The operating assumption is that it would really not help them so much but what have you experienced and as you're looking at the Affordable Care Act, are you disappointed with the level of participation that's expected? We'd love to hear your perspectives about that. The great thing I would say about Massachusetts having us do it ourselves is that we all knew each other, all the stakeholders had previous relationships. We could work very closely with our legislature to kind of design it to fit Massachusetts and we're not the same as every state and we certainly would acknowledge that. So there was some benefit to I think actually a great deal of benefit for us to be able to have done our own thing and really designed it to fit us and to get all of our input. In terms of small employers, I would say a couple of things. We've actually seen an increase in the number of employers that offer health insurance. There was a fear that, and not from us, but others that said, oh, there's a penalty of $295 if you don't offer health insurance. People are just going to drop it and say, I'm going to pay the $295. Well, that wasn't the case. We didn't expect it to be because really they don't offer it because of a penalty. They offer it, as Rob said, because you need to do it in order to attract the talent that you want. So I kind of think there is more of a level playing field among small employers looking to attract a talented workforce. This might come up later. Our exchange hasn't attracted a lot of small employers to purchase through the exchange. We have a lot of other avenues to purchase in Massachusetts, including a private sector exchange, purchasing directly through the carriers, which continued to be active in Massachusetts. So it hasn't played a major role, like it might in other states. We'll see how that all plays out. But I think the small business community would tell you that A, health reform was a good thing. And two, let's tackle the cost as seriously as we did the access question in 2006. Hi, I'm high of sharing with Shar Music here in Ann Arbor. This is a very interesting topic. I've had a lot of friends who are business owners who are terrified of the American, like we were saying, the Affordable Health Care Act. My question for the Massachusetts, your experience, was with the fair share, I found that very interesting, because I think that's where you have tons of people who aren't paying into health care. And what I was curious about is what kind of revenue was generated just from that fair share? I would imagine it was significant. And then my second question as a follow-up was, was there anything in your program that helped guide decision making? Because I've seen, even in our own company, bad health decisions made over and over and over again that certainly have an effect on health care costs. Let me answer the first part. And then Rick, I think we'll do the second. The fair share contribution, as I mentioned earlier, is the per employee per year costs for employers who don't offer care, whose employees don't offer insurance whose employees show up at emergency room and so forth. It's interesting on how much that has raised. The state initially thought it would raise something in the order of $50 to $100 million annually. I and others who looked at these numbers were skeptical because this applies to employees of 11 or more. And 90-plus percent, well into the 90s, percent of employers in Massachusetts, 11 or more offer health coverage. So it was just arithmetic. There aren't very many who don't offer health coverage and therefore have to pay the penalty. So initially it didn't raise just about $10 to $20 million, much less than anticipated by some, though, as I say, I expected it would end up. So they kind of toughened it. They changed some of the rules because they wanted to raise some more money. This was two years into it. We argued there were two or three of us already said, no, you're still not. Even with that, you're not going to raise much more money. It turned out we were right. And so the most recent year, it's raised only $14 million. So the 295 was a political compromise that basically broke the log jam that allowed us to achieve universal health reform. But the employer piece is the intersection, the employer responsibility piece is not really fair share, because that's so narrow. It's the intersection of the individual mandate and the high level of employer coverage. And so it's all of the previously immortal uninsureds who now are taking up employer offer. And that's where the employer responsibility has been focused. But it's fascinating because in the national news, the fair share has been seen either as an employer mandate from those on the right, which it isn't. And they've criticized it or inadequate from those on the left. And it's neither. It was a political compromise that basically achieved health reform, but misses the larger point about employer responsibility in our achievement of universal access. One answer to the other. Just your question about that on the cost side. So as we said several times, our law was about access. And we really do believe solving the cost issue is going to be a multi-pronged approach. And one is to educate employers and help them educate their employees about how to become more engaged and better purchasers. So we actually started a campaign last year to begin that. And so we went around the state. We featured employers in different parts of the state who had done some interesting things. And I remember one was a big retailer with a lot of low-income employees that got health insurance for the first time. And they didn't have primary care doctors. They went to emergency rooms every time they needed health care. They just weren't good consumers and consumed in a very expensive way. And so the benefits manager of this company talked about the program she initiated because she said we had to educate them about they had health insurance for the first time. And they just needed some direction that that's not where you go when you have a cold or an ear rake. We featured other employers that had done creative things around designing benefits to encourage healthy behaviors and people with chronic diseases to take their medications, employers that did really meaningful wellness programs. Because we really do think that, again, it's going to be multi-pronged. But one thing that we can do is help employers become smarter and more engaged purchasers. And they would ask us and help us talk to our employees because we don't know how to do that either. So we purchased it on their behalf, but we've never talked to them about how to become better consumers. So I do think there's a big role that employers and associations can play in that regard. Can I just mention I think the advantage of watching another state go through this before you is to learn the lessons that are there to learn. And as we've talked about it, I think you saw cost as an issue and unaddressed in the initial version of it. I think the lesson from Michigan is we have got to get serious about cost containment as the ACA comes into place. I see Senator Marlowe is here, and Senator Marlowe has been pushing the Senate, at least, for a focus on cost containment. And I think we ought to do what we can to support his efforts. If we don't get serious about cost containment as the ACA comes into place, and I actually think it's kind of a state issue. There may be some federal issues to take care of, but there's a robust state public policy agenda around this. And again, I think we can learn from Massachusetts. But if we're not hearing that message that we've got to get serious about cost containment because you can talk about access and you can talk about who pays for it, but if nobody can afford it, including the federal government, we've got a problem. And I think that's really where we sit today. If I can follow up on this issue of cost containment. I know, Rick, you were on the connector board. Now you're part of this new board that was set up from the 2012 legislation. Could you talk a little bit about, not the specifics of legislation, but your take on what it means to have business at that table and involve in the process going forward? So yeah, so what Tom is talking about is our legislature passed last year, big cost containment bill. They created a health policy commission as part of that. That will implement a lot of the cost containment provisions that was included in the law. That's governed by an 11 person board. Again, the governor asked me to sit in there as the employer seat, but there's a lot of different stakeholders around that table as well. We just got up and running. So it's a little early to report any successes there. But I think, well, as I always say, it's the number one concern of the members of our organization. We surveyed them every fall. We just did that in the fall of 2012. We asked them what their major concerns about doing business in Massachusetts, the cost of health, there's this way up here. And then the cost of taxes, regulatory burdens, energy, everything else is kind of on a second tier. So it's still up at the top of the list. It is hard. We thought access was hard in 2006. This is really hard. And I really do think there's a lot of things that need to be done. There's no one answer. So we're seeing payment reform implemented in Massachusetts so our insurers are moving away from fee for service to global payments because fee for service, as we know, rewards volume as opposed to quality care. We've mandated that all of our insurers offer tiered or limited network products so that consumers begin to have choices and will pay more to go to higher costs, less quality providers. And we've mandated that those products have at least a 14% differential in terms of the price. And I guess the big thing this commission will focus on is we've set this target to reduce the rate of growth of spending. And we don't have, if we fail to meet their target, the consequences aren't necessarily spelled out. But the fact that we're gonna shine a light on whether we're successful or not, we'll be holding hearings. If we fail to achieve the target, we'll be looking at individual providers that may have caused us to not be successful. I mean, shining the spotlight on this, on an annual basis is, I think we'll change the dynamic. And nobody wanted price controls and heavy regulation and we all agreed to that. Let's see if we can, the market can straighten itself out and that's what we're gonna be working on. Just might add a, wanna do things. I think we are, Massachusetts, where we were in access in 2006, passed a law, had a lot of promise. Question was how would we implement it? So now we have this rather sweeping cost control law passed last year. And now the question is how are we gonna implement it? Are we gonna do it well or not well? And there's enough room in there to cause a lot of trouble and do it not well, I would argue. I in the business community during the process of leading up to this, while the legislation was being debated, we're arguing strenuously that we should, this legislation should build off of the market forces that were already beginning to slow down the rate of growth of health costs in Massachusetts through the new payment systems and other efforts. Some of the worst elements of particularly the house bill did hit the cutting room floor, ones that would have been a huge overreach on the part of government and would have in fact compounded the problem and put the state government into a realm that it would be simply impossible to handle sensibly. As I say, blessedly, a lot of that did not make it in the final legislation. But it still is a comprehensive piece of legislation. And I'm very grateful Rick is on the commission and some others, but because the jury is very much out as to whether we're gonna be able to handle the implementation of this phase two as well as we handled phase one. Can I just say from our standpoint, whether you do it well or not well, I don't really care. We'll be watching. Okay, lessons learned. All right, whatever way. Can I ask, there's a question that came in from Twitter that had to do with the connector. And the connector, like the ACA exchanges, is an online marketplace for the new way of our insurance. The question was, did you observe any hitches in moving people into the online market? I don't think so. I would say it's a much more robust place than it was in 2007 when we started to sell. I mean, again, we were kind of learning as we went along and there'd been a lot of improvements. But as I said, not a lot of small employers purchase their health insurance through our connector, but a lot of individuals, the kind of non-group market, most of that whole marketplace did move to the connector. And I think have had a very favorable buying experience. They do surveys of customer satisfaction and it's been pretty, the results that I've seen are pretty favorable. So I think we've done it pretty well. I just had a little story here. You might wonder why we call it the connector. Then Governor Romney introduced it as an exchange. And the heavily democratic legislature, when they decided to go along with this concept, didn't want to give him credit. So it was renamed the connector authority. And so now we have to keep explaining that our connector is our exchange. So anyway. This is just hot off the Twitter wire. We hear that doctors are going to leave practice due to health reform. Any data on healthcare won't force changes in Massachusetts. Not that I know of. It's not an issue that's surfaced. No, the challenge we had was initially, all of a sudden, all these people had health insurance. They wanted primary care doctors. Like every part of the country, there's not enough primary care doctors in Massachusetts, but it's not a Massachusetts problem. It's a nationwide problem. And the fact that we don't really compensate them as well as we do other specialists. But initially it was difficult for some people to find one because panels were closed. And I'm not sure we've solved that yet, but I can't say there's been an out migration of physicians out of Massachusetts. Oh, that's right. Matt Davis has a nice piece that just came out on the chart website. That's a survey of physicians in Michigan asking about how they're gonna respond to the expansion of Medicaid. And I think the answer was overwhelmingly at the risk capacity of the state. If I'm characterizing that properly. Why don't we, there's a couple more back here, you ever want to? Hi, Joe Tassie. And thanks for being here. One of the things you haven't spoken to is the engagement of the provider community in the whole dynamic as you went through. You just, I'm glad, Mr. Lord, you just talked at the beginning about finance reform in terms of trying to get at the incentives for the way care is delivered. But did you, or how do you intend to engage the provider community? Or is it just through financial reform? It seems to me that the real cost in healthcare is in dealing with chronic disease management, end-of-life coordination across continuums of care. I mean, that's what we're hearing about nationally. And I'm not hearing that in your dialogue as yet. So I would say the providers certainly were very active in the whole cost containment debate that we had the last two years. Because you're right. I mean, that's where the cost drivers are. And we kind of are relying on them without mandating that they do certain things because it wasn't like one size fits all. But if we're gonna meet our spending target, it'll be because the providers did the things like the disease management and the case management and other creative things that you have mentioned. And we changed our provider payment system to reward good behavior. It'll be those things that allow us to achieve our goals. So I don't wanna make it sound like they were engaged. They're very engaged in watching this very closely. We're not gonna be successful in reaching our target unless the providers figure this out. But we didn't wanna mandate and regulate, set price controls and do all that stuff. We're kind of taking them on their word that they're making a lot of progress, as Mike said, and we want them to continue. We have some of the great, obviously hospital systems in the world and they're really crown jewel of the master's economy linking in with the whole biopharmaceutical, life sciences and so forth. But they've been at the forefront. One of the reasons we've been able to begin to bring down our growth and healthcare costs is these providers and the insurers and working together, struggling sometimes and but nonetheless working together to be on the cutting edge of disease management and technology and use of technology to try to control these costs, especially for example around these costly cases. So we're fortunate that they have driven a lot of what's already taken place. Michelle Seeger, I'm curious about how Massachusetts considers the role of promoting healthy lifestyles to individuals as part of your strategy for cost containment. So our healthcare cost containment law creates a $60 million wellness trust fund that will be administered by our Department of Public Health to do a number of things, but to A, promote a healthy lifestyle campaign just as we kind of did the whole anti-smoking campaign of the 90s that has turned out to be very successful. So they've received a substantial amount of money to do that. The law also created tax credits for small employers that implement wellness programs and we're just getting the rules out about how those will all work, but there will be part of this, we do see it as part of the solution, the whole promotion of healthy lifestyles and whether it's through a statewide campaign by the Department of Public Health, whether it's by encouraging employers to implement meaningful wellness campaigns. We have some great examples of big employers in Massachusetts, EMC and Raytheon are always mentioned as models of employers that have really done a lot of creative things to work with their employees and to educate them. The challenge has been small and medium-sized employers, they don't have the tools, they don't have anybody in the company that has the expertise to lead them through this. So we've got to figure out how to bring some of those successful models to small to medium-sized employers, but that is part of the vision. And I would say I think that we've reached or are reaching a critical mass in Massachusetts around employer initiatives on the whole healthy lifestyle effort and not only because it's the right thing to do but obviously it also helps to improve the healthcare of their workforce. Can I just maybe even ask a little bit of you guys? I mean, I think one of the issues for, this is a true distinction between large and small. If you're large, self-insured, you invest in wellness and the rewards come back to you directly. If you're small and you buy an insured product and your entire employment, if you've got 23 employees and none of them have a claim next year, the rates go up with the pool. It's a disconnect between a workplace-based wellness program and your rates. There's just no connection to it. Correct that one? Maybe we'll correct it and then share that experience with you. Now, that's a great point for, in Massachusetts, if you have 50 or fewer employees, you're in the small group pool and you're right. You just rated with that whole big group and even if you do everything right and you have the healthiest employees in the world, you won't benefit like larger employees do. Mostly. I will say though that we here, and there's a lot of data to show this, healthier employees, in our absence as much, they're more productive at work, they have fewer workers' comp claims. So even though you might not see the direct payback in terms of your health insurance premiums, there are other paybacks for having a healthier workforce and we would like to connect it even more, as you suggest, Rob, but we haven't figured that one out yet, but we'll tell you when we do. Please. Yeah. Hi, my name is Sharon and I'm a small business owner. I have a dozen employees and I'm actually really happy that there are some legislators in the room listening to this panel. That makes me really happy. What I wanted to know from the Michigan folks is are there panels being created that are starting to address these very issues and what, and maybe the Massachusetts guys need to answer this, what's the likelihood that we can make this happen and keep the misinformation from dropping reform entirely? Well, I think from my perspective, reform is on its way, whether we, you know, I mean the reality is they did it at the state public policy level now that it's happened in Washington, it's coming. We do have some choices to make in Michigan about how to do it and I think one of those choices is the exchange, what does it look like and the reality is the state legislature has not passed exchange legislation in Michigan. Therefore hasn't allowed us to receive federal money to design it, like $9 million sitting on the sidelines, not able to bring down, almost the entire business community in Michigan has supported putting an exchange in, doing it now, doing it Michigan's way as opposed to allowing the federal government to come in and sort of impose one. Plus you still have to connect up Michigan's Department of Community Health and Medicaid system and eligibility and there's a lot of working pieces to a viable exchange. Let me say to you, from my perspective, the exchange will be far more beneficial in the individual marketplace than it will be in the small business marketplace. I think that's been your experience. Yes. In Michigan, we actually have had a very different system than Massachusetts had going in. We have one large dominant carrier, Blue Cross Blue Shield in Michigan, who has a different set of rules than everybody else. They community rate. No health underwriting, meaning if you're sick, you're gonna get the same rate as if you're healthy at Blue Cross Blue Shield. Other carriers play by a different set of rules and that has created this long standing dialogue about cherry picking and rating. All that goes away with ACA. That debate goes away. Everybody goes to community rating. I think one of the beneficial pieces of it. So I mean, some pieces are gonna happen that I think are going to be good for us, good for small businesses here in Michigan. This cost containment thing is really the issue, I think, that if we've learned any lesson at all, we have to understand that the Affordable Care Act did nothing for cost containment, just as the initial version of the connector and your reform law in Massachusetts. Again, if we haven't paid attention and put that panel together in Michigan, let me give another word to what Senator Marlowe's trying to do. Great discussion going on right now. Blue Cross Blue Shield in Michigan, changing from one form to another. And the sort of political deal that's being created is out of that will come a billion and a half dollars into a new trust fund, a new organization and fund. And the question is, what will a billion and a half dollars do in the future? My perspective, our perspective is, if we don't use that opportunity to talk about cost containment, about bringing down the cost for everybody, and we let it actually become a subsidy fund for seniors and children. I love seniors and I love children. But if that's where that goes, then I think we have made a huge mistake and make mistake of time. I think Senator Marlowe's really, I think he agrees with that and that's why he's been trying to put into that legislation that it has a purpose that is cost containment. I wonder if I could put Helen on the spot because the Affordable Care Act does do a number of things in the area of cost containment and obviously it received less attention than the mandate or the Medicaid expansion. Maybe you could briefly summarize the key elements. Yeah, thanks, Tom. I was hoping to have a chance to follow up on your comment, Rob, because I actually think that it's true that the Massachusetts reform took the approach. Let's do access first and then we'll deal with coverage down the road. The Affordable Care Act sort of took that approach, but I think not entirely. I think it would be more accurate to say that in the Affordable Care Act, what you get is a set of policies that we know will increase access, expanding coverage, and a set of policies that we hope will reduce spending. So there are a lot of changes to the way Medicare contracts with doctors and hospitals that are reflected in the Affordable Care Act. Now, what will those do in the long run? I don't think we know and I think one of the difficult things about controlling costs is that what you really wanna do what you really wanna do is not just control costs, you wanna drive the system to greater value, right? Because therefore there are really valuable things happening. You don't wanna cut those costs, not all costs are created equal. And so the question is, how do you identify value? And we don't really know and the other problem is it's not obvious who the you and how do you identify value? So it's clear for the federal government that the federal government as the payer in the Medicare program, that's the way the federal government gets into this game and to a lesser extent through the Medicaid program. When you get to the state level, you operate your Medicaid program in conjunction with the federal government but then the you, that's a piece of the puzzle but then the other piece is the you who are employers and then it becomes very decentralized, right? And so cost control or to put it differently identifying value and paying for value becomes very difficult, right? And if we knew how to do it, we'd already be doing it already. So we had a political problem, not we had a political problem, the difficulty in expanding access was a political one but it was clear how to do it, you expand insurance coverage. The policy problem of controlling costs is much more complex because it is both a technological problem and that we don't really know how to identify value and a political problem in that once we know how to do it, we need to cut into people's incomes because that's what healthcare spending is. You know, I'm optimistic about this in Michigan actually and I am because we have had for about six or seven years an organization that came out of the Michigan Department of Community Health a number of years ago looking at the uninsured that kind of evolved to the point that we call it the Michigan Health Insurance Access Advisory Council and it is virtually all of the players, the stakeholders in healthcare and it's so it's labor and business and payers and providers and consumers and a number of them are sitting here today, Wendy from the Michigan Chamber and Chuck from the Manufacturers Association and Margie from Michigan and we've been having a really good conversation about cost containment. I think actually it's one of those things we agree on. It's also that contentious table but one of the things we have found a level of agreement on is if we can't, nobody can afford it if we don't get under this issue of cost containment and even I would say that providers, the hospitals and docs and others have stayed at that table talking about cost containment. It is easy to think that's whose ox gets gored when you begin to talk about cost containment and they've hung in, stayed at this conversation and again, I'm optimistic that we can have a rational policy conversation in Michigan because we've laid the groundwork for it to have the players at the table. Dr. Billy, did you, good. Thanks, Jack Billy from the University of Michigan. I wanted to follow on this excellent theme. One of the few things that both the right and the left agreed on about the Affordable Care Act was that it was primarily oriented towards improving access or coverage and not really much oriented towards redesigning the delivery system but there are some really superb both pilots and expansions of pilots in there. One of which Michigan is an epicenter for in the United States which is population management, patient-centered medical home, accountable care organizations, organized systems of care. They go by many different names but I was just curious and especially for Mr. Fowler as well whether those experiments since Michigan has so many of them going on more than I think virtually any other place in the country because it's not only federal pilots like the ACOs but also the multi-payer advanced primary care demo and Blue Cross's effort with organized system of care. There's just extensive amount of trying to improve effectiveness and coordination. So I was wondering if comments from Massachusetts whether you've seen that progress from that and also comments from Michigan colleagues as to whether that's a source of optimism for you. Well, let me, I'll give you the short answer first which is yes and I think you mentioned a couple of them. Another is the Keystone Center at the Michigan Hospital Association doing some cutting edge research on how to take cost out of the hospital experience and improve the quality of care. I think we've got a lot to draw on and those players are all at the table as we talk about it. I am optimistic that we can have a, I'm gonna say leading edge but I think we can lead this whole discussion about cost-containing. And we've been seeing things happening in Massachusetts to the insurers for their part without the legislature prompting them or government prompting them is to change the provider payment system so we've been moving away from fee for service to global payments for three or four years now and almost all of them are heading in that direction. And then yeah, we've seen the providers reorganize themselves. We have six, I think six federally recognized accountable care organizations now in Massachusetts. So looking at changing the delivery system. So yeah, all those things are happening and I think they're all part of the ultimate solution. So yeah, we're encouraged by the signs that we're seeing in Massachusetts as well. Senator Marley, last word? Yes, I just have a question and as we're trying to work on this containment and in the Massachusetts plan that you folks had and introduced, did the individual market purchasers did they take more ownership in their own health care since you have some history in this thing? In other words, there's a lot of us that feel we just sit on a card and it's been there since we've been employed and so now you have an individual and sometimes when they go online and they make these choices, are they choosing higher deductibles so they have skin in the game as I call it. And so could you just elaborate on that and thank you. Yeah, I think we're seeing a tipping point both with employers getting serious about offering choices, tiered products, less expensive, but then with not as many options. And what's interesting is that I think surprisingly so in one sense, because we haven't had this until recently, many, many employees are opting for the lower cost, higher deductible lower premiums, recognizing that if they have a serious illness they can go to the great institutions but they don't need to do that for a routine checkup. And so that I think offers enormous promise. I think we've been kind of slow in Massachusetts, maybe that everybody had, but certainly Massachusetts employer community I think had been slow to really and the insurer is to really push in that direction but I think with the cost pressures that have been mounting we've taken significant steps and as I say I think we're at a tipping point both from the employer community and the employees. So I'm very heartened about that as a key part of this mosaic of controlling costs over the long term. So it doesn't happen right away but it takes time. Takes time but it's moving faster than I would have expected and people I've talked to in the provider community insurer community have said the same thing, that it's happening faster the take-up rate is faster and greater than they expect. Yeah, three years ago nobody purchased a tiered network product in Massachusetts and now the health plans tell us their fastest growing products are tiered network products which to the employer is more affordable and then to the employee, they have a choice as Mike said if you wanna go to the expensive institution you still can and you might want to depending on what you're seeking treatment for but yeah, so the market's responding now. We are just about out of time and before I turn things over to Mary Ann to give our two guests from Massachusetts a chance, if you had one piece of advice to give to your colleagues. One for the hails, no I'm kidding. I couldn't resist. No, I mean as I think back at the Massachusetts law and what we as a employer community brought to it, I think in the end because we stayed involved and it isn't in a lot of tough negotiations and clashes and so forth so for, I mean it wasn't as if there weren't, we were all singing kumbaya here. But as we stayed involved with the goal of trying to achieve a reform that would produce universal access but one that would have the incentives in the right place and that would potentially work long term, I think our contribution was one that we in the end have a law that is better for employers than a lot of the other options and two I think our contribution helped produce a better law than there would have been without our involvement and participation so I would just pass that on and say I think sticking with it and trying to stay to the extent possible United, not always easy as a business community is very helpful. I've heard that said that if you're not at the table you're on the menu, good point. So yeah, I agree with Mike, being at the table was really important but I would say because there's a lot of stakeholders in this room it's important for all of you to work together to make this work. I mean we, again Massachusetts although we're about the same size as you, it seems like it's off a small community sometimes and where we kind of know the leaders of the hospital association, the insurance companies and the physician groups and the other players and have a respect and relationship with them and even though we don't always agree I think we just said to ourselves all right six years ago we gotta make access work and we feel like we did that. I think we're all very serious now about making cost work because we know if we don't solve this, our access isn't gonna be sustainable and so we have to do it and I feel good that we're all there committed to making this work and I think that's the only way that we're gonna be successful. So that would be the advice I might share. That's good, thank you all. Before we thank our guests from Massachusetts I do wanna add another special thanks to regroup Jan Mulman and Liz Conlon who sponsored our webcast today. We really appreciate that, we know we have many people out there watching on the webcast and that's terrific and the webcast will live on our website and so if you wanna go back and replay some of the great quotes that you heard today you can do that over time. So and I know there are many more people who I wanna ask questions today. Our colleagues are gonna be with us. We're gonna have a reception out here right outside the auditorium. So also we know there are a lot of folks in the overflow room, please come join us at the reception and ask your questions there. Please join me in thanking our wonderful panelists.