New state health plan would affect more businesses, but more evenly
The Baker administration has been quietly workshopping an alternative to deal with surging Medicaid costs that would scrap the governor's controversial budget plan to levy a steep new assessment on some employers in favor of a more modest increase to an existing health care surcharge on many businesses.
The new approach, according to multiple business leaders and legislators, would apply more evenly across employers than the pending assessment proposal, but would generate less revenue that the $300 million the administration was counting on to balance its budget for next year.
As part of their efforts to build support for health care solutions among employers, senior administration officials have also told business leaders that they would seek a multi-year freeze in unemployment insurance rates, and pursue a waiver from the Trump administration to go back to rules under Romneycare when employees offered insurance through their employer were ineligible for MassHealth.
The effort by Gov. Charlie Baker to go back to the drawing board reveals a desire by the governor to win broader consensus within the business community for a way to generate additional revenue for MassHealth that can be successfully sold to legislators.
"I don't go around advocating for tax increases on small business, but this plan, because it's broader and less onerous, it would be preferable to smaller businesses," said Bill Vernon, Massachusetts State Director for the National Federation of Independent Business.
The new working proposal would target an increase, at least temporarily, in the Employer Medical Assistance Contribution (EMAC) that businesses with six or more employees pay as part of their overall unemployment insurance costs.
The funds collected under the current system flow into accounts that cover subsidized insurance plans and medical care for the uninsured, including the Commonwealth Care Trust Fund and the Health Safety Net Trust Fund.
In meetings and conference calls with business groups, senior Baker officials have detailed a proposal that would more than double the existing EMAC rate of $51 per employee, according to multiple people who have participated in the discussions.
A new estimate for how much the administration expects to collect from a higher EMAC rate was not immediately available, nor was it clear how Baker's budget office would propose to close the remaining budget gap if the surcharge increase falls short of $300 million.
The Baker administration for weeks has been signaling a willingness to back off its initial budget proposal to impose a $2,000 per employee assessment on companies with 11 or more employees that don't offer health coverage or that do not insure at least 80 percent of their full-time employees.
That proposal, which was drafted in response to what the administration described as surging MassHealth costs as a result of full-time workers shifting off employer-sponsored coverage and into Medicaid, met immediate and strong opposition from business organizations who saw it as an unfair tax targeting consumer behavior over which they had little control.
"The administration has been very open to if not this, then what?" Health and Human Services Secretary Marylou Sudders told the House and Senate budget committees this week.
Behind the scenes, senior Baker officials have been in negotiations with business groups over alternatives that have narrowed in on EMAC as a way to generate additional revenue without creating new red tape for businesses.
Senior administration officials did not dispute the details of the alternative plan, and told the News Service they were also exploring options to bring down the cost of health care and make private insurance more attractive to low-wage workers, to ensure that MassHealth enrollment projections are accurate, and to regularly verify MassHealth enrollee eligibilty.
"The Baker-Polito Administration has engaged various stakeholders in the health care and employer community to discuss the best way to protect Massachusetts' health care system given the recent shift in the insurance marketplace resulting in a surge in Mass Health enrollment. Since the budget was proposed, members of the Administration have stated repeatedly they are open to alternatives to protect taxpayers from paying for thousands of private sector workers' health insurance, while maintaining Massachusetts' leading health care system," Baker communications director Lizzy Guyton said in a statement.
The alternative plan is not without its flaws, however, and building consensus has not been easy.
While many businesses, including those with low-wage workers that are enrolled in MassHealth, may be able to avoid the steep penalties under the employer assessment plan, other businesses that do provide health coverage to the vast majority of their employees and could have avoided the assessment would pay under the new plan.
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