Massachusetts lawmakers reject health reforms but keep new fees

Published 7:15 am Thursday, August 3, 2017

BOSTON — Business leaders are ripping Massachusetts’ Democratic lawmakers for saddling private companies with $200 million in new health care fees without passing reforms to rein in MassHealth spending.

Last week, lawmakers rejected Gov. Charlie Baker’s package of reforms to the state’s Medicaid program, but they kept in place increases to an existing fee, called the employer medical assistance contribution, to help cover health care costs.

Baker, a former health care executive, had coupled the increased fees with a bundle of changes to ratchet down MassHealth spending.

The Republican said the reforms were needed to offset the skyrocketing cost of covering hundreds of thousands of private sector workers who’ve signed up for government-backed health plans in recent years.

But Democratic majorities in the House and Senate rejected his plan, saying the changes would eliminate benefits for hundreds of thousands of people, and that more time was needed to review his proposals.

“We’re terribly disappointed,” said Bill Rennie, vice president of the Massachusetts Retailers Association. “We felt that the governor came up with a good reform package and that one proposal should not have moved forward without the other.”

Rennie said the increased fees will add to financial pressures on retailers, which include rising rents, energy costs and the nation’s highest minimum wage.

“It’s becoming extremely difficult for some retailers to remain in business,” he said.

For all employers, contributions to the medical assistance pool will rise from $51 to $77 per worker. Employers whose workers get public health benefits will pay up to $750 more per worker.

To lessen the blow, the state plans to temporarily scale back unemployment insurance rate increases. Rates will still go up, but employers will pay about $334 million less over the next two years than they otherwise would have.

John Regan, executive vice president of government affairs at the lobbying group Associated Industries of Massachusetts, said increasing fees without the other reforms penalizes employers who already struggle to offer commercial insurance coverage to workers.

In addition, he said, those employers are now asked to “bail out an unsustainable public insurance program.”

Baker, who signed the bill on Tuesday, said he hopes legislative leaders will sit down with him to discuss a new package of MassHealth reforms.

“The Legislature told us they would work with us on this, and we’re going to take them at their word,” he told reporters Tuesday.

Baker’s reforms sought to move about 140,000 people with incomes higher than the federal poverty level out of MassHealth and into subsidized insurance provided through the state’s Health Connector. Non-disabled, full-time workers with access to employer coverage would be barred from MassHealth.

His reforms also called for lobbying the federal government to reimpose a ban against employees who are offered employer-sponsored insurance from seeking coverage through MassHealth. That provision was removed under the Affordable Care Act.

The state’s leaders are under growing pressure to bring down costs at MassHealth, which covers more than 1.9 million people and consumes roughly 40 percent of the state’s $40.2 billion annual budget.

MassHealth spending increased by 4.6 percent to $16.1 billion from 2014 to 2015, according to the latest data from the Center for Health Information and Analysis. The low-income insurance plan is jointly funded by the state and federal governments.

Republican lawmakers, who supported Baker’s reforms, say inaction by Democrats will drive up the state’s costs.

“We thought the governor’s plan was fair,” said Rep. Lenny Mirra, R-West Newbury, a member of the Legislature’s Health Care Financing Committee. “I don’t understand why they wouldn’t go for it.”

MassHealth has “moved away from its role as a safety net for the poor and disabled” to “an insurance plan for everyone” by allowing full-time workers to sign up, he said.

Mirra said the state can no longer afford to put off reforms.

“It’s become totally unsustainable,” he said. “Everything else in the budget gets squeezed.”

Democratic lawmakers defend the decision to shelve Baker’s MassHealth reforms.

“There’s no doubt that MassHealth needs reforming, but we need to take time to do this in a manner that doesn’t harm people,” said state Rep. Linda Campbell, D-Methuen, a member of the Legislature’s Public Health Committee. “We have to take it slowly.”

Campbell said Baker’s directive to lawmakers — that they approve the reforms within 60 days of signing the fiscal year 2018 budget — left little time to review the plans.

“The governor wants a quick fix,” she said. “But there’s no quick fixes on this one.”

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhi.com.