At a budget hearing, lawmakers indicated that while they are sympathetic to the problem of rising MassHealth costs, they have questions about the Baker administration's proposal.
BOSTON -- MassHealth, the publicly subsidized health insurance for poor people, is on track to cover 2 million people next year -- around 30 percent of the Massachusetts population. The program is taking up 40 percent of the state budget, crowding out spending on other expenses, like education.
To help address the rising costs, Gov. Charlie Baker has proposed a controversial new fee on employers who do not offer adequate health insurance.
At a budget hearing before the Ways and Means Committee on Thursday, lawmakers indicated that while they are sympathetic to the problem, they have questions about the Baker administration's proposal. Secretary of Administration and Finance Kristen Lepore said the administration is open to other ideas and is talking to businesses, who currently oppose the proposal.
"We've said all along this is a proposal," Lepore said. "If someone else has a better idea on how to accomplish this, then yes, we're open to any other suggestions that anyone else would have."
When Massachusetts passed universal health care 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 That assessment was repealed in 2013 to conform with the federal Affordable Care Act.
But Baker officials say that as a result of the Affordable Care Act, people with access to employer-based coverage for the first time became eligible for MassHealth, if their income qualifies. According to state officials, there are at least 300,000 people working full time in Massachusetts who are enrolled in MassHealth, costing more than $1 billion.
"Clearly, we have an issue, where we're seeing movement of employees from employer-sponsored coverage onto the state's public assistance program," Lepore said.
Baker wants to use the fiscal 2018 budget to reinstate an employer fee -- a $2,000-per-employee assessment on businesses with at least 11 employees that do not offer health insurance. The standards would be higher than in the 2006 law for the amount of the insurance costs businesses must pay and the percentage of workers who must use the coverage. The proposal would require businesses to pay at least $4,950 per full-time employee toward that worker's health insurance. It would require 80 percent of employees to accept the businesses' insurance plan.
Companies say the proposal is unfair. Small business plans are often expensive, so even if a business offers insurance, employees may choose to use their spouse's insurance or buy insurance individually. The business could then be penalized.
At the budget hearing, Ways and Means Committee Chairman Rep. Brian Dempsey, D-Haverhill, said the growth in MassHealth costs "is cause for great concern."
Ways and Means Committee Chairwoman Sen. Karen Spilka, D-Ashland, said she agrees with Lepore that having MassHealth take up 40 percent of the budget "does not leave us that much left for all the program and services we want to fund."
But some lawmakers had concerns about specifics of Baker's proposal.
State Sen. Eileen Donoghue, D-Lowell, asked if Baker officials would consider applying the assessment only to companies with more than 25 or 50 workers. Donoghue said that could "help very small businesses that may be between a rock and a hard place" where the insurance plans they have access to are expensive and they face a penalty if employees do not take them.
State Sen. Vinny deMacedo, R-Plymouth, wondered if Massachusetts' congressional delegation is working to address the issue as Congress considers repealing and replacing the Affordable Care Act.
"With changes we're seeing at the national level, does our federal delegation understand and are they working towards addressing the issue which allowed individuals to leave private insurance and go to MassHealth?" deMacedo asked. "Since change is happening at a federal level, clearly this is a negative aspect of the ACA that's become very real for those of you who have to budget this."
State Sen. John Keenan, D-Quincy, worried about part of Baker's proposal that would put a moratorium on new insurance mandates -- a move intended to keep the cost of insurance down.
Keenan said MassHealth offers better coverage for substance abuse treatment than many private insurance plans, so individuals with drug addiction who are eligible for MassHealth may be inclined to take it even if they have access to a private plan. Keenan worried that, without a new mandate requiring private insurers to cover substance abuse treatment, the migration to MassHealth will worsen.
Lepore said the administration has been talking to businesses in a "collaborative dialogue" to consider adjusting the proposal. Lepore said she hopes the federal government will give Massachusetts flexibility to make the changes it wants.
On the issue of mandates, Lepore said small businesses already find that purchasing insurance is unaffordable, which is one reason they are dropping coverage or offering less generous plans. Mandates could add to those costs.
"Employers want to offer a set of robust benefits to employees," Lepore said. "It's to the point of becoming increasingly difficult for them to do so, because it's cost-prohibitive."
Lepore said the Baker administration is still reviewing the impact of the bill proposed to replace the federal Affordable Care Act. She said she is interested to see the scoring of the Congressional Budget Office when it comes out.
Attorney General Maura Healey, whose office monitors health care cost trends, said her office is looking at the proposal closely and has been talking regularly with insurers, hospitals, community health centers, state officials and the congressional delegation.
"We need to make sure that we don't lose ground, that people have access to health care, and that health care be more affordable than it is currently," Healey said.