Baker said the charge is necessary to address a flaw in the Affordable Care Act and protect taxpayers from paying for insurance for people who are employed.
BOSTON -- Gov. Charlie Baker on Wednesday defended a controversial proposed assessment on employers who do not offer health insurance. Baker said the charge is necessary to address a flaw in the Affordable Care Act and protect taxpayers from having to pay for insurance for people who are employed.
"It was never intended under the original MassHealth law that hundreds of thousands of people who are working full time would end up having their insurance funded by the commonwealth of Massachusetts," Baker said.
Under the fiscal 2018 budget that Baker released Wednesday, spending on MassHealth would grow by 6.6 percent, to $16.2 billion. MassHealth accounts for close to 40 percent of the proposed $40.5 billion budget. That is down from double-digit increases three years ago, but still represents a huge sum of money for the state, and one the Baker administration has been trying to decrease.
A centerpiece of Baker's budget is his proposed changes to MassHealth, including the employer assessment.
When Massachusetts passed universal health care reform under then-Gov. Mitt Romney in 2006, it included a $295-per-employee assessment on companies that did not offer adequate health insurance to their workers. That assessment was repealed in 2013 to conform with the federal Affordable Care Act, since President Barack Obama's national health insurance reform included slightly different employer fees and requirements.
Under Romney's Massachusetts law, an employee who was offered health insurance by their employer would not be eligible for state-subsidized insurance. Under the ACA, those employees can enroll in state-subsidized care if they meet eligibility requirements by earning less than $16,000 a year.
Now, Baker is trying to use his fiscal 2018 budget to reinstate an employer fee -- this time, a $2,000-per-employee assessment on businesses with more than 10 employees that do not offer health insurance. The standards would be higher than in the 2006 law for the amount of the insurance costs that businesses must pay and the percentage of workers who must use the coverage. A business would have to pay $4,950 per full-time employee, which is similar to the cost of MassHealth, and 80 percent of its employees would have to use the coverage.
"What we're saying here is if you're not going to cover your employees, and they're going to end up on MassHealth, you need to be making a contribution to the cost of their health care," Baker said.
Business groups have voiced concerns about the proposal. They say it is unfair for small businesses to have to pay for a problem generated by the Affordable Care Act.
"It's not fair to scapegoat employers for a major deficiency in a public policy that was created in Washington, D.C.," Chris Geehern, a spokesman for Associated Industries of Massachusetts, a business trade group, recently told The Republican/MassLive.com.
Companies say the fees will hurt small businesses for whom health insurance is expensive, since in many cases employees will turn down that coverage -- which means the business will be hit with a fine.
Baker said he is "open to debating and discussing" details of the proposal. But he said the state "needs to wrestle with the fact that a huge portion of people working full time are either not taking coverage available through their employer and are going through MassHealth or are working for people not offering coverage."
According to state officials, there are at least 300,000 people working full time in Massachusetts who are enrolled in MassHealth. This could be because their employers do not offer coverage or because it is cheaper for them to enroll in MassHealth. This population has cost the state more than $1 billion, Baker said.
"That's $1 billion in taxpayer money that's being used to fund health insurance for people who are working, for the most part, full time," Baker said.
In addition to the employer assessment, Baker said he plans to ask the federal government for flexibility to run the Massachusetts program as the state sees fit, rather than having to conform with provisions of the Affordable Care Act, such as the national version of the employer mandate.
Baker is also proposing a cap in the growth of reimbursement rates paid to providers by commercial insurers. The most expensive hospitals and providers would not be allowed to increase their rates at all above the rates paid by Medicare. Medium-priced providers would be allowed to increase their rates by up to 1 percent, and the lowest-priced providers would not have any cap. The point is to limit the disparity in what different providers are paid for the same service.
Baker said Medicare rates still increase every year, and this is simply a way to base prices more closely on the costs of health care.
Under Baker's proposal, Massachusetts' Health Connector would craft new options so small businesses can access cheaper insurance. The state would eliminate some administrative facility fees and publish more reports showing provider prices for common procedures. Baker would eliminate vision benefits, like eyeglasses, for members of a particular MassHealth program.
The proposal comes as Congress considers repealing and replacing the Affordable Care Act, but state officials say they have to plan their budget based on the existing policy while insulating Massachusetts residents from changes in Washington that could hurt the state.
Noah Berger, president of the liberal-leaning Massachusetts Budget and Policy Center, called Baker's approach to the employer assessment "a really smart, commonsense approach to try to address the cost shift from private employers onto the state Medicaid program."
Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation, said the focus on health care costs "is very necessary and long overdue." But McAnneny said she has reservations about the employer assessment. "Having a $300 million new assessment on employers is a big amount by any measure," McAnneny said.
McAnneny said the problem is with the ACA for letting someone who is offered employer-based coverage take MassHealth. "Essentially, employers are being held accountable for decisions made at a federal level," McAnneny said.