Patrick Sees Biz Relief In Jobless Rate Freeze, Health Fee Plans
With key provisions of the federal Affordable Care Act getting ready to kick in a year from now, Gov. Deval Patrick on Tuesday proposed to eliminate a cornerstone of the state's 2006 health care access law that penalizes employers who don't make a "fair" contribution to their employees' health insurance premiums.
Patrick proposed a new "employer responsibility contribution" to replace the assessments charged to all employers to fund the state's Medical Security Program providing coverage to individuals receiving unemployment benefits.
Administration officials said the new fee would be smaller than the current fee and would be used to subsidize health coverage for low-income residents who will be moved from the Medical Security Program, which the governor proposed to eliminate, to MassHealth under the new federal Affordable Care Act.
"By retooling this program we can lower the overall contribution while maintaining an original intent of the 2006 health care reform law, and that is that everyone has a stake in its success," Patrick said.
Patrick said his bill would also block a scheduled $500-million increase in the amount businesses pay to cover benefits to unemployed workers. If the freeze in unemployment insurance (UI) rates is approved by the Legislature, it would mark the fourth consecutive annual rate freeze, a move lawmakers and Patrick have agreed to in the face of requests from businesses who say rate relief will help them preserve and create jobs.
The rate relief has been granted amid a long, slow economic recovery from the Great Recession. The Patrick administration estimates the state's unemployment insurance trust fund will finish 2013 with a $600-million balance if the rate freeze is approved.
House Speaker Robert DeLeo called for a freeze in the unemployment insurance rate in his opening remarks to the House last week after lawmakers were sworn in, and Senate President Therese Murray said later, "That will most likely happen."
Asked whether he considered a more permanent reform to the UI system to avoid uncertainty for businesses over rate increases each year, Patrick said, "Yes." Lawmakers, including Senate Minority Leader Bruce Tarr, have repeatedly called for more comprehensive UI rate reform.
"I'm not sure that the reform that we need will alleviate the need to come back and look at rates from time to time, but there is an interest that we share with the legislative leadership in comprehensive UI reform and I think we'll see that in this session," Patrick said.
Patrick announced his proposed legislation Tuesday at the State House, where he was joined by business leaders, Rep. William "Smitty" Pignatelli, Sen. Michael Moore and members of his Cabinet, including Labor and Workforce Development Secretary Joanne Goldstein, Housing and Economic Development Secretary Greg Bialecki, Administration and Finance Secretary Glen Shor and Health and Human Services Secretary JudyAnn Bigby.
Patrick said the reforms would eliminate duplication and make the system more efficient and "less burdensome for small and large businesses."
The legislation would eliminate the Fair Share Contribution Program after June 30, 2013, striking a key and controversial provision of the 2006 health care reform law that helped expand coverage to nearly all Massachusetts residents. The original program mandated that employers with 11 or more full-time employees make a "fair and reasonable" contribution to their health insurance, or pay a penalty of $295 per employee.
That law was updated in the 2012 health care cost containment bill, increasing the threshold to 21 employees, and exempting employees who had health coverage through a spouse's employer from counting against the total.
However, under the Affordable Care Act, a similar policy will take effect for employers with more than 50 employees, carrying a $2,000-per-worker fine that could result in double penalties if the state law remains on the books.
Shor said the 2006 law succeeded in encouraging more employers to offer coverage than before the law was passed, but, "We want to reduce burdens on employers and this proposal does that."
Like the fair share program, Patrick and others said the Medical Security Program will also no longer be necessary after 2014 when those individuals who received coverage through the program become eligible for subsidized coverage through MassHealth and the Connector.
Shor said the MSP assessment on businesses in 2012 totaled approximately $180 million, but that the new "employer responsibility contribution" to help cover low-income residents will be "repurposed and lower than what it is today" by 2014.
"This is something that will help out small businesses here in the Commonwealth and, frankly, will put them on a very even playing field with all the competition in 49 other states," said Jon Hurst, president of the Retailers Association of Massachusetts.
Bill Vernon, state director for the National Federation of Independent Business, said the proposed reforms would put Massachusetts businesses "on a level playing field" with competitors in other states.
"Small businesses have been seeking for years more equitable enforcement of the Massachusetts Fair Share contribution and eventually repeal. We are extremely pleased by the governor's leadership on this issue," Vernon said in a statement
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