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Legislature Levies Medicaid Assessment Minus Reforms

Posted on July 26, 2017

The Massachusetts Legislature today levied a $200 million tax on employers to cover a shortfall in the MassHealth program without making long-term structural changes needed to solve the problem.

StateHouse-resized-600.pngThe House of Representatives and Senate took the action despite pleas yesterday from the Baker Administration and the business community to consider the assessment and the long-term reforms as a package. AIM believes the financial problems at MassHealth, which provides health insurance to 1.9 million residents, will become more severe without significant reforms.

The assessment would increase the Employer Medical Assistance Contribution (EMAC) and fall most heavily on companies where employees use MassHealth instead of an employer health plan. The assessment would be partially offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.

“The 4,000 employer members of Associated Industries of Massachusetts (AIM) are deeply disappointed that the Legislature has again decided to impose an assessment on employers without reforming the MassHealth program and reining in the crippling cost of health insurance,” said John Regan, Executive Vice President of Government Affairs at AIM.

“We note that the Legislature has pledged to pursue MassHealth reforms at a later date. We look forward to working with them on those reforms.”

The Legislature initially passed the reform-free assessment on July 7 as part of the budget for Fiscal Year 2018. Governor Charlie Baker returned that section of the budget to the Legislature 10 days later and asked lawmakers to pass the full package of reforms designed to place MassHealth on a firm financial footing.

The proposed reforms include:

  • Restructuring MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
  • Moving 140,000 people with incomes more than the federal poverty level out of MassHealth and into ConnectorCare;
  • Shifting 230,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into CarePlus, which does not;
  • Requiring the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered employer-sponsored insurance from seeking coverage through MassHealth.

It is uncertain whether the governor will sign the newest version of the assessment.

“Employers are thus left not only to struggle with the rising cost of providing health insurance to their own employees, but to bail out an unsustainable public insurance program as well,” Regan said.