March 20, 2017
VIEWPOINT

Mass. should wait on $2K business healthcare assessment

The Massachusetts Taxpayers Foundation is a strong proponent of reducing healthcare costs, and we have repeatedly warned that the growth in MassHealth, the state's Medicaid program, is crowding out spending on other priorities, yet we have been critical of the Governor Charlie Baker's proposed fair share assessment on employers. Why is that?

Quite simply, the fair share assessment is the wrong solution for taming growth in MassHealth, which now insures almost 2 million residents or 30 percent of the commonwealth's total population. Because of its broad application, the assessment will apply to many employers whose employees do not utilize the MassHealth program, doing little to address the underlying growth trend, while making healthcare costs even more unaffordable for employers and employees.

Here's why.

The proposed fair share assessment applies to all employers with 11 or more full-time equivalents who don't insure at least 80 percent of their employees and pay at least $4,950 per employee towards health coverage. At $2,000 per employee, this assessment is expected to generate $300 million over the first six months, and more than $700 million when fully annualized. When calculating their uptake rate, employers cannot include employees who have coverage through their spouse, or their parents if they are under 26 years of age, through the Veterans Administration if they are a vet, or Medicare if they are an older worker. This means that many employers who provide generous insurance by any objective measure but whose employees have other health insurance options would still be assessed, regardless of whether or not employees actually utilize MassHealth.

While it is true that employer-sponsored coverage has declined and MassHealth enrollment has grown over time, the link between the two is not as clear-cut as the Baker Administration has indicated. Employers have continued to offer coverage at the same rate over the past five years according to the state's most recent health insurance survey of employers. Fewer employees are taking that coverage because their share of the costs is getting too expensive, or because those of modest means now have more public insurance options. Qualified workers can receive subsidized care through the Connector and non-working adults without children now qualify for MassHealth for the first time; assessing employers will not change this dynamic but could exacerbate it.

The decline in employer-sponsored coverage is one of many factors contributing to MassHealth enrollment growth. Since federal health care reform was implemented, the state has seen a greater uptick than anticipated in MassHealth from students and traditional populations (such as low-income mothers with children, the disabled and the elderly), an indication that the state may have underestimated the number of uninsured. Having a clearer understanding of who is enrolling in Medicaid through better data is a critical step in being able to properly proffer a workable solution.

Given all the changes to the ACA being contemplated in Washington, D.C., Massachusetts will likely get fewer Medicaid dollars when all is said and done, necessitating far more fundamental changes to our MassHealth system. It would behoove policy makers to wait until we better understand the changing healthcare landscape before imposing a $700 million assessment on employers.

Eileen McAnneny is President of the Massachusetts Taxpayers Foundation. For a report on the fair share assessment and other information, visit www.masstaxpayers.org.

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