Officials Say State Must Address Runaway MassHealth Costs

The Massachusetts Statehouse. Photo Courtesy of Wikimedia Commons.

By Sarah Toy
Boston University Statehouse Program

 A version of this story appeared in the Worcester Telegram & Gazette

As Gov. Charlie Baker faces increasing backlash to his proposal to levy a new assessment on employers who do not meet certain health insurance requirements, some are saying the state must find ways to address runaway MassHealth costs and enrollment.

Baker’s proposal to impose a $2,000 per employee assessment on companies with more than 10 full-time workers that fail to offer “adequate” health insurance has run into stiff resistance in the business community. The administration is reported to be discussing an alternative to impose a smaller cost on a broader range of employers.

“We have to change the system, which means we have to change the way health care is paid for,” UMass Memorial Health Care president and CEO Eric Dickson said. “I do support the governor starting a conversation around that.”

“We lose a lot of money on Medicaid,” he said. The UMass Memorial system includes several community “disproportionate share hospitals” that see a higher number of public payer patients, under its umbrella.

When the proportion of MassHealth enrollees goes up, the health care network suffers financially. “This is true for any health care provider,” Dickson said. “The only thing that is profitable to us is the commercial (payers).”

There were 1.93 million people enrolled in MassHealth in fiscal 2017, an all-time high. In an effort to temper enrollment rates, and with MassHealth taking up 40 percent of the state budget, the Baker administration proposed a $2,000 per employee assessment on companies with 11 or more employees that do not offer health coverage or do not insure at least 80 percent of their full-time employees.

The proposal, filed in January with his fiscal 2018 budget plan, was met with almost immediate resistance from business groups and leaders.

John Stowe, president of Lutco Inc., a Worcester-based manufacturing company, said his firm offers its employees a good health plan, but some choose MassHealth instead.

“It’s not our problem that they’ve chosen to go that way,” he said.

Timothy P. Murray, the former Massachusetts lieutenant governor and president and CEO of the Worcester Regional Chamber of Commerce, said he thought the proposal placed a disproportionate burden on the employer community. He also expressed concern that it would slow economic growth.

“This is a major issue for businesses in terms of their budgets,” he said. “When there’s a cost like this, it comes down to not hiring or laying off. Companies might purposely try to cap growth to try stay under 11 employees.”

Those thoughts were echoed on a statewide level.

Christopher P. Geehern, a spokesman for the Associated Industries Massachusetts, said the proposal implied employers were responsible for workers moving into MassHealth.

“We reject the notion that employers have caused this problem and therefore are responsible for solving it,” he said.

Eileen McAnneny, the president of the Massachusetts Taxpayers Foundation, agreed, saying that it was not clear the growth in MassHealth was solely due to a decline in employer-sponsored insurance.

“The solution shouldn’t be just for employers to pay more,” she said. “There are more factors involved that need to be considered.”

In response to the fallout, the Baker administration has worked with business groups to develop more palatable alternatives. The latest set of ideas includes increasing the current Employer Medical Assistance Contribution rate paid by businesses with six or more employees, along with a multi-year freeze in unemployment insurance rates.

The administration is also looking into pursuing a waiver from the Trump administration that would allow Massachusetts to return to the rules under the state’s original health care law, in which employees who were offered insurance through their employers were not eligible for MassHealth.

Dickson, of UMass Memorial, acknowledged employers’ frustration with Baker’s assessment proposal and the difficulty of coming to a consensus on a plan to control MassHealth costs.

“I don’t think Governor Baker ever believed everything in the budget that was related to health care was going to pass,” he said, “but the only way he can spark conversation is to throw this out first with some controversial things in there.”

Material from the State House News Service was used in this report.

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