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Taking Dead AIM [BusinessWest]

By O'Brien, George
Proquest LLC

Rick Lord was talking about the Associated Industries of Massachusetts, how it got its start nearly a century ago, and how things have certainly changed for an organization originally charged with representing the interests of the Commonwealth's many manufacturers on Beacon Hill.

"Very few employers were providing healthcare insurance to their workers in 1915," said Lord, AIM's long-time president, referring to what is certainly the most pressing topic confronting the organization's 3,000 members, and an issue AIM is currently addressing on several levels.

But then, again, many things haven't changed since AIM first set up shop, said Lord, noting that the Boston-based agency is still going to bat for members on issues such as workers' compensation rates and the general cost of doing business in the Commonwealth, matters as pressing 97 years ago as they are today.

The methods for advocating on behalf of business owners have certainly evolved over the decades, however, and AIM is making full use of them, said Lord. As an example he noted a recent blog post, authored the day after the presidential election was finally settled, and taking the form of an open letter to President Obama urging him to work with Congress and do the hard work necessary to address the fiscal cliff approaching on Jan. 1.

"Congratulations on winning the re-election," it starts, before quickly getting to the heart of the matter. "The subtext of the election in virtually every exit poll is that Americans want their leaders to work together in a manner that generates confidence in a world and an economy rife with uncertainty. The pervasive scale of that uncertainty has already depressed business spending for much of 2012 - fixed investment fell 1.3% during the third quarter, and more than 40% of companies surveyed by Morgan Stanley this summer cited the fiscal cliff as a major reason for spending restraint.

"The unmistakable message - negotiate, legislate, educate, and articulate," it went on. "The member employers of AIM respectfully urge you and members of Congress to work toward timely action on this most pressing matter. We do so in full understanding that the issues are complex, the decisions hard, and any solution to some degree necessarily painful. In your own words, Mr. President, it's time to move forward."

It is with equal fervor that AIM is addressing the health-insurance issue in Massachusetts, a matter impacting virtually every employer on one level or another.

"Healthcare has been the number-one concern of our members for the past four or five years, as health-insurance costs have gone up at two to three times the rate of inflation," he said. "So we have been very active on that issue."

Elaborating, he said AIM pushed hard for a healthcare-cost-containment bill, passed in July, that has set an aggressive target - tying health-insurance rates to gross state product (GSP).

"The government isn't going to set prices or impose regulations as much as monitor whether the healthcare industry can achieve that target," he continued. "And if they can't, then hospitals and health-insurance plans will have to file performance-improvement plans with the state.

"This puts in place a process to monitor whether we can successfully achieve that target," he went on, adding that the complex law, which takes effect Jan. 1, creates an 11-person health policy commission, which he will sit on to represent purchasers of health insurance.

For this issue, BusinessWest continues its Getting Down to Business series with an indepth conversation with Lord about AIM, the state of the business community in the Commonwealth, and what the big picture looks like moving forward.

Mission - Statement

When asked to assess the sentiments of business owners in the Bay State, Lord said the most recent Business Confidence Index (BCI), which AIM has been gauging and reporting since 1991, pretty much sums things up.

Overall confidence, measured just before the election, was off two-tenths of a point to 51.1 (50 is neutral on this 100-point scale), said Lord, noting that those at AIM attribute this to some uncertainty about who would win the presidential race, and much greater uncertainty about what would happen in the months to follow, no matter who won.

"Business owners, in general, don't like uncertainty and unpredictability, and that's what we're all facing until we figure out how to deal with this fiscal crisis," said Lord, adding that AIM's informal mission has been to try to add measures of certainty and stability, while, overall, making a state not known historically for being business-friendly moreso.

AIM goes about this assignment in many ways, said Lord, listing everything from direct advocacy in the State House on a variety of issues to a host of employee education and engagement programs; from networking events to a relatively new program called BuyMass, which, as the name suggests, works to help Baystate companies do more business with one another (more on that later).

Creation of such programs and initiatives has been part of an ongoing evolutionary process since AIM was created as an association of manufacturers, charged with protecting the interests of a sector that gave many of the Commonwealth's cities and towns their identity a century ago.

"At that time, workers' compensation laws were first being discussed, as well as other employment-law issues, and a group of manufacturers got together and decided they needed an organization to represent them," said Lord, adding that, over the decades to follow, the state's economy diversified, with healthcare, education, technology, and service taking leading roles. In the late '80s, AIM would evolve into an employers association that would represent all those sectors.

Membership, nearly one-third of which is still from the manufacturing sector, has grown steadily over the years, Lord noted, and currently includes not only giants such as Raytheon, Fidelity, and EMC, but also companies with only a handful of employees.

Most of the issues currently confronting the business community impact ventures of all sizes, said Lord, mentioning everything from unemployment insurance rates - for which AIM is attempting to secure at least another freeze, if not greater relief - to paid sick leave and the repeated attempts (thus far unsuccessful) to make it the law.

But by far the biggest concern, and drag on the economy, is the spiraling cost of healthcare insurance, he told BusinessWest, adding that AIM has been and will continue to be very aggressive in pursuit of cost controls and other measures to ease the burden on employers of all sizes.

Lord said the compromise healthcare-cost-containment bill passed in late July takes what he called a "measured first step" toward slowing the runaway health-insurance premiums that have impeded job creation and economic growth, while also creating much of that uncertainty that business owners disdain.

The measure calls for limiting increases in medical spending to a level equal to overall economic growth from 2013 to 2017. The spending-growth target would drop to 0.5% below gross state product from 2018 to 2022, before returning to that economic growth benchmark in 2023 and beyond.

Need for the legislation is made clear, said Lord, by statistics showing that, while the Massachusetts economy has been growing at 3.7% annually in recent years, medical spending rose at between 6% and 7% prior to the economic downturn, and Massachusetts employers and citizens now pay $15,864 per year to insure a family through a health maintenance organization, and $6,000 to insure an individual.

The State of Things

But while health insurance is priority one, there are many "second-tier" matters AIM is addressing, said Lord, noting that all of them fall under the broad category of doing business in Massachusetts and, more specifically, at least controlling those costs.

Unemployment insurance is again a hot-button issue, he told BusinessWest, adding that employers are facing an automatic 40% increase - triggered by the balance in the state trust fund - scheduled to take effect in the first quarter of 2013.

"We've already had conversations with the Legislature and the administration about freezing the rates for 2013," he said, adding that AIM doesn't see justification for the hike. "Massachusetts is actually in better shape than most states; 34 states are currently borrowing from the federal government to pay unemployment benefits. We actually have a half-billion dollars in our state trust fund."

AIM was successful in securing a freeze last year, when an automatic hike was due to take effect, he said, adding that, beyond such stop-gap measures, the organization is seeking a broader overhaul of the unemployment-insurance structure.

"Our system is very expensive," he explained. "We offer more weeks of benefits, and we have eligibility requirements that are looser than most states ... we would like to see some reforms that will make this system less costly."

Other issues include paid sick leave, paid family leave, and the repeated attempts to legislate those matters, energy costs, tax policies, and other issues that impact the overall tax climate in the state, which he said is better than it was 25 years ago, when the state was known to many in business as 'Taxachusetts,' but still needs improvement.

"Paid sick leave hasn't passed yet the Legislature," he said, "but there are rallies every year in support of it. We've been able to work with some of the other business groups to fight that off."

Beyond cost-control efforts, though, AIM is also working to make it easier for members to do business - and also do more of it, said Lord, adding that one key initiative is the so-called BuyMass program, which, in a nutshell, is a collection of programs designed to enable Bay State companies to make acquaintances with one another and, if things go right, establish business relationships.

As one example, Lord cited what he called several recent "matchmaking events" involving some of the more prominent employers in the state.

"These events make it easier for them to pre-screen potential vendors and interview them," he explained, noting that a few of these sessions have been staged in Western Mass. involving Raytheon and Pratt & Whitney.

He said that quantifying or qualifying the results is difficult, but he knows that at least a few area companies are now doing business with those giant defense contractors because of the matchmaking events.

Perhaps the biggest issue heading into 2013 is that fiscal cliff, said Lord, adding that, while it's a national issue, it has widespread repercussions in Massachusetts and every other state. There are no easy answers when it comes to the expiring tax cuts, mandated budget cuts, and looming debt ceiling, he noted, but inaction will certainly exacerbate matters.

"Congress and the president don't have much time to deal with this, and that's clearly on the minds of the business community," he said. "We need both parties and the president to work together to figure out a solution."

The Bottom Line

While noting that 2015 is fast approaching, Lord said AIM isn't even thinking about its centennial celebration yet.

There's too much going on in the next few months and even the next few weeks to be concerned about a party more than two years out, he noted. There's the fiscal cliff, health insurance, and mandated sick pay to confront, and more matchmaking to do among Massachusetts companies.

In short, this employers association gives itself the same directive it gave President Obama in that blog post on the economic crisis: it's time to move forward.

Copyright: (c) 2012 BusinessWest
Wordcount: 1893



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