| The Baker administration’s plan to levy heavy per-employee assessments on businesses that don’t meet proposed health insurance requirements may have been based on a “flawed premise,” according to an influential Beacon Hill think tank.
The Massachusetts Taxpayers Foundation, a pro-business leaning policy shop that wields significant clout within the Legislature, has prepared an analysis that challenges the administration’s claim that escalating costs within the MassHealth program can be pinned, in large part, on the shift away from commercial coverage offered through employers.
The draft policy brief, obtained by the News Service, contends the “more plausible explanation” for the enrollment growth that has put severe pressure on state finances is that Massachusetts underestimated the number of people from a variety of backgrounds who would become eligible under the Affordable Care Act’s Medicaid expansion and the success of enrollment outreach programs.
The Taxpayers Foundation also asserts that the assessment would land on employers who are doing nothing to contribute to MassHealth enrollment growth, and could expose the state to a lawsuit for running afoul of federal law that limits a state’s ability to regulate private employer-sponsored health plans.
“The proposed fair share assessment is based on a flawed premise, would be implemented in an inequitable manner and could be subject to a legal challenge,” the draft MTF analysis concludes.
The News Service has also learned that the assessment on businesses would generate as much as $585 million when in effect for a full-year in fiscal 2019, according to the Baker administration. That’s nearly double the publicly discussed $300 million price tag for businesses that the governor used to balance his budget proposal based on six months of assessments.
The nine-page paper deepens fault lines over the issue between Gov. Charlie Baker and the business community more than two years into his administration. MTF officials confirmed the authenticity of the draft and the broad conclusions outlined in the paper, but does not plan to publish a finalized policy brief until at least later this week.
“We want to change the conversation. The purpose is to point out the fair share assessment is flawed for the reasons we outline and to move beyond it and take a comprehensive approach to address MassHealth enrollment growth,” Taxpayers Foundation President Eileen McAnneny told the News Service.
Baker proposed in his budget for fiscal 2018 to impose a $2,000 per employee assessment on companies that don’t offer health coverage or insure at least 80 percent of their full-time workers. The administration is counting on the assessment to generate $300 million over the last six months of the fiscal year to help offset the estimated $600 million in increased Medicaid costs in fiscal 2018.
The administration stood by its analysis of enrollment trends when presented with the MTF report, noting that between January 2014 through 2015 the number of employed individuals on MassHealth grew by 195,000 individuals and public spending on employed residents increased by $900 million. But as MTF points out, there is insufficient data to know whether or how those workers were insured prior to ACA implementation.
“To protect taxpayers, the administration proposed reforms to maintain MassHealth’s sustainability, address the affordability of health care, and increase the state’s flexibility in ACA implementation, while reducing administrative burdens on employers and reintroducing an employer contribution requirement for employers with over 10 employees. Through these reforms, the commonwealth would bring back key elements of the original, bipartisan Massachusetts health law passed years ago and begin to address overall affordability of health care,” a spokeswoman for the Executive Office of Health and Human Services said in a statement.
All of this could be further complicated by Congress’s plan to repeal and replace the Affordable Care Act. The current House GOP proposal would eliminate the individual mandate to purchase insurance and the expansion of Medicaid, and reform the way states are reimbursed for Medicaid expenses.
“We have one catastrophe, which is we’ve had a dramatic expansion of Medicaid. We have a pending catastrophe as the Affordable Care Act gets repealed and replaced,” Partners Healthcare CEO Dr. David Torchiana told the group of health care policy leaders Tuesday working to address provider price variation.
Many business groups have come out in opposition to the governor’s proposal, and the MTF analysis could provide ammunition to raise doubts among House Democrats whose support Baker will need as House leaders prepare a fiscal 2018 budget due out in April.
House Speaker Robert DeLeo said Tuesday that the House would have to act to address rising MassHealth costs, but dodged direct questions about Baker’s proposal, and Health Care Financing Committee Chairman Rep. Jeffrey Sanchez said lawmakers were still working to “digest it.”
To justify its proposal, the Baker administration put forward data that showed, among other things, a 7 percent decline in commercial insurance coverage between 2011 and 2016 at the same time the percent covered by MassHealth grew at the same rate.
The Taxpayers Foundation said drawing a correlation between the two statistics is “likely incorrect,” and said it would be more helpful to compare data from just prior to the implementation of Obamacare in 2014.
