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Many employers, especially those in the health industry, agree that Gov. Charlie Baker has a problem. In the past five years, roughly 500,000 workers and their children who used to be on a company insurance plan have switched to government-funded free or subsidized coverage.
That shift is busting the state budget, where almost 40 percent of spending this year will be on MassHealth.
Reactions To Baker's Plan
Baker has proposed several major changes to fix the problem. His plan would charge employers with 11 or more employees $2,000 for every full-time worker not covered by a company insurance plan. He'd cap the prices hospitals, doctors and other health care providers could charge for their services. Baker would also eliminate what are known as facility fees some hospitals tack on to bills and would not allow any new mandates for health insurers.
"By implementing these reforms, taxpayers would no longer pick up the cost of more and more employed individuals' healthcare and the Commonwealth would bring back key elements of the original, bipartisan Massachusetts health law passed years ago,” said Baker's chief of staff, Tim Buckley, in a statement.
Well, sort of. The state's 2006 health coverage law did include what was known as the "fair share fee." It was the last piece of the law to fall into place, the piece that almost killed the whole deal. In the final days of negotiations, business groups agreed to an amount, $295 per worker. So to business leaders, $2,000 sounds like a lot more money.
Sure, it is, said Robert Carey, a principal at RLCarey Consulting and a member of the team that launched the Massachusetts Health Connector.
"But $2,000 pales in comparison to what other employers, most employers, I should say, are providing," Carey said. "It won’t even cover half the cost of these folks on public programs."
But Jon Hurst, president of Retailers Association of Massachusetts, said there’s nothing fair about a new assessment for his members. Hurst asked why employers should be fined because workers can’t afford their share of a company plan premium and sign up for MassHealth or subsidized coverage through the Connector instead.
"On the surface it looks like a tax, especially for small businesses," Hurst said. "They have the highest premiums not only in the state, but probably in the country."
Many employers were surprised to see Baker, a Republican, suggest something that looks like a new tax. And they said the substantial increase from $295 to $2,000 flies in the face of the 2006 deal.
Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, said the grand bargain was to start by making sure virtually all residents had health insurance, and then "address affordability. And 11 years later, we haven’t really made any meaningful progress on the affordability front."
That’s one reason the state’s largest employer group, Associated Industries of Massachusetts (AIM), told Baker’s team late last week that it will not support the $2,000 assessment. AIM president Rick Lord said there’s a clear reason that employers are dropping coverage or that employees decline it -- insurance is just too expensive.
"Assessing employers $2,000 per employee does not seem to be the way to address this problem in a meaningful way," Lord said.
The shift from private to public insurance is happening, in part, because of the Affordable Care Act. The ACA says anyone can apply for public coverage, even if they have access to an employer’s plan. The 2006 state law did not allow workers with access to employer based coverage to sign up for free or subsidized insurance. And the ACA made more people eligible for public plans.
Price Caps For Hospitals
Baker laid out many of his concerns in a letter to Congress last week. His remedies took many on Beacon Hill by surprise.
"People in the health care industry have been wondering for a while where the governor is on all of these issues. Well, here’s Charlie," state Rep. Jeff Sanchez, a Democrat, said with a chuckle. Sanchez is the Massachusetts House chair of the Joint Committee on Health Care Financing and the co-chair of a special commission looking at why hospital prices vary.
Baker has offered few details about how the state would set price caps for hospitals, an idea first reported by State House News Service.
Michael Sroczynski, Massachusetts Health & Hospital Association’s vice president of government advocacy, said the organization looks forward to more details.
"Medicaid is a critically important health care program and Massachusetts has benefited from federal funding under the ACA for MassHealth," he said. "With the talk of repeal of the ACA in Washington, there is reason to be concerned about the future.”
Baker's plan to cap prices is unusual coming from a Republican where the party line has been to let the market determine how much hospitals can charge. But Sanchez said with all the changes in the works in Massachusetts, as well as in Washington, D.C., these are unpredictable times.
"We’re back at another redefining time in health care, and it’s pretty dramatic," Sanchez said.
Sanchez, Baker and some other State House leaders said they remain committed to making sure virtually everyone in Massachusetts has health insurance. But the coalition that came together to craft the landmark law back in 2006 may be back at square one, looking for ways to fund that commitment.
This segment aired on January 18, 2017.