Gov. Baker Revamps Health Insurance Business Fee Proposal
Gov. Charlie Baker is scrapping his controversial plan for a new $2,000 per-employee fee on businesses that don’t offer health insurance in favor of a new proposal his aides say would instead hike existing fees and could generate $200 million.
The new plan is part of a package of legislative changes Baker filed today with the legislature’s budget committees that could, in total, generate $314 million in savings or new revenue next fiscal year, according to his office.
It comes months after he first floated in his budget proposal a plan to hit employers who don’t offer health coverage with a $2,000 per-employee assessment, a move that was intended to help rein in growing MassHealth costs and drum up $300 million in revenue.
But the proposal was met with harsh backlash from the business community and several business groups, many of whom Baker aides say they have huddled with in recent months to craft their new proposal.
The new proposal calls for a temporary, two-year increase to what’s called the Employer Medical Assistance Contribution, or EMAC, which companies with six or more employees currently pay. All of companies in that class would pay up to $77 in EMAC per employee rather than the current maximum of $51. Companies that have employees on MassHealth also would pay up to $750 for each of those workers.
Together, the changes could generate $200 million next fiscal year, with a clause to end the program at the close of calendar year 2019.
The proposal mirrors, in part, one the Senate put forward in its budget proposal to change the EMAC, and comes after the Senate and House both asked Baker to rework his proposal on the health care assessment amid the business community’s concerns.
House and Senate budget leaders are currently holding closed-door talks crafting the final version of next year’s budget. In filing his proposal, the governor is asking lawmakers to incorporate it into the budget they’re preparing to send to him, presumably by or around July 1.
Health insurance reform has become a focus in this year’s budget wrangling, even as State House leaders keep an eye on potential changes Congress is weighing through the American Health Care Act.
In rolling out the beefed-up EMAC fees, the Baker administration said it had the backing of a number of business groups, including the Associated Industries of Massachusetts, the Retailers Association of Massachusetts and the Massachusetts High Tech Council, among others.
“A 24-month temporary employer assessment will allow time for vital reforms to be implemented to deal with both the cost of healthcare, and the unintended consequences of the ACA on the Commonwealth,” said Jon Hurst, president of RAM.
Baker aides emphasized that the administration’s proposal is being made as part of a package of reforms. Other changes, the administration says, would require federal approval but could generate another $114 million in savings next fiscal year.
Those proposals would bar non-disabled adults who have access to employer health care from joining the MassHealth rolls, as well as aligning MassHealth more closely with commercial plans.
Baker is also proposing moving hundreds of thousands of non-disabled adults and caretakers from MassHealth to other insurance programs, which could mean another $88 million in savings in fiscal year 2019.
The feds likely won’t decide until late fall whether those changes are officially approved. Baker’s office said most of the changes are slated to go in effect on Jan. 1, 2018.