Does the state have $300M hidden in a mattress somewhere?
We don't see Charlie Baker winning any Conservative of the Year awards at the next Republican National Convention, but it still was jarring to see the Massachusetts governor propose what amounted to a MassHealth bailout tax on companies of more than 10 employees.
That lets you know how bad the state's Medicaid situation has gotten. Almost 40 percent of the state budget goes toward MassHealth spending, which is expected to reach $15.2 billion in fiscal 2017 and $16.2 billion in fiscal 2018.
Baker has proposed a number of overhauls the business community is both excited and wary about, but the initiative to penalize companies of more than 10 employees $2,000 per uninsured worker for not offering employer-sponsored health insurance has rubbed the business community the wrong way. Certainly the idea of whether company health insurance is an employee benefit or a societal need can be debated, but Baker's potential fine takes it one step further by penalizing even companies that do offer health insurance but fail to get 80 percent of their employees to sign on – not accounting for issues like employees on their spouses' insurance.
This proposal would generate an estimated $300 million annually – a drop in the bucket compared to $16.2 billion – but would significantly reduce MassHealth's projected $600 million deficit in fiscal 2018.
Baker's bailout tax does not feel like the right answer – potentially increasing the cost of doing businesses for companies that already offering health insurance for employees. As an insurance industry veteran, Baker worked on these issues long before he became governor, and he has never been a fan of new taxes. The state may have earned its tax-and-spend reputation in the past, but since the Great Recession it has been pretty disciplined about keeping a lid on overspending.
So if you believe that this kind of proposal from the governor is a last resort, it makes you wonder what other options are left to tackle this seemingly intractable issue.
A $600-million deficit is a big pill to swallow. Efforts to rein in rising drug costs, reduce MassHealth fraud, and create accountable care organizations to team providers and insurers together should help mitigate healthcare spending over the long term, but that doesn't help a deficit for the fiscal year starting in five months. In addition to increasing the cost of doing business, the penalty on non-compliant businesses isn't the sole answer either, and if it is implemented, it will become a tough revenue stream to give up.
No, we don't have another $300-million proposal to replace Baker's plan. But the state's political and business leaders need to work together to produce some alternative solutions while we wait for the long-term efforts to bear substantial results. We clearly can't wait for these issues to be addressed thoughtfully in Washington. It's up to the state's leaders to sort out the most prudent path forward, and soon.
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