Massachusetts Gov. Charlie Baker is proposing to reinstate fees on private companies that do not provide health insurance to their workers as part of a plan to rein in surging costs in the state’s Medicaid program, administration officials said Tuesday.
If approved by the Legislature, firms with 11 or more employees would be required to pay the state $2,000 annually for each worker who is not offered an adequate employer health care benefit. The original employer mandate, then $295 per worker, was included in the state’s landmark 2006 health care law but was repealed in 2013 after the federal Affordable Care Act took effect.
The Republican governor also hopes to lower Medicaid costs through payment caps on some health care providers and a moratorium on new insurance coverage requirements and by offering consumers more options through the Connector, the state’s health insurance exchange.
The proposals represent the latest effort by Baker, a former insurance executive, to control costs in the Medicaid program known as MassHealth.
The program’s spending has doubled while enrollment has increased 70 percent since 2007. Medicaid eats up about 40 percent of the state’s annual budget, the administration said.
The enrollment jump has led to $100 million in unanticipated Medicaid costs in the current fiscal year and has occurred despite the state’s 2.9 percent unemployment rate, the lowest since 2001.
“The unintended consequences of Massachusetts’ compliance with the Affordable Care Act are forcing taxpayers to cover the cost of a growing number of employed individuals’ health care as these workers increasingly move to the publicly subsidized healthcare system,” Tim Buckley, a senior policy adviser to Baker, said in a statement.
The ACA included an employer mandate for companies with 50 or more workers, but it was not scheduled to be implemented until later this year. President-elect Donald Trump and Republican congressional leaders have vowed to repeal and replace the federal law.
Under the original Massachusetts law, workers could not go on Medicaid if their employers offered adequate plans, but an expansion of Medicaid under the ACA lifted that restriction and broader eligibility guidelines have led to workers foregoing their own company benefits and enrolling in MassHealth.
Since 2011, there has been a 15 percent increase in the number of full-time workers in the state who not covered by insurance plans offered by their employers, the administration said.
A new employer mandate could pose real problems for some small companies, said William Vernon, Massachusetts director of the National Federation of Independent Businesses.
While he recognizes the financial hole Massachusetts is in due to runaway Medicaid expenses, Vernon said policy makers are partly to blame by making the government-run insurance program too attractive.
“More companies would probably offer insurance,” under Baker’s plan, Vernon said, “but it won’t solve your problem because the problem is the (Medicaid) eligibility standards are too lax, (the) insurance is too generous.”
Implementing the $2,000 per worker fee along with the other reforms would mean that “taxpayers no longer pick up the cost of more and more employed individuals’ healthcare,” Buckley said.
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