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Proposed Assessment Will Hurt Employers Who Provide Health Insurance

Posted on January 26, 2017

Governor Charlie Baker yesterday described his proposal for a $300 million health assessment on employers as an attempt “to wrestle with the fact that a huge portion of people who are working full-time are either not taking coverage that’s available through their employer and going on MassHealth, or are working for people who aren’t offering them coverage at all, and going on MassHealth.”

health_care.jpgHe added, according to State House News Service, that “the centerpiece of this budget really is a smart and common-sense approach to address the problem of costs being shifted from private sector employers for their employees onto state government.”

Set aside for the moment the questionable premise of rampant cost shifting in a commonwealth where 76 percent of employers offer health insurance compared to 55 percent in the rest of the country.

The important point is that the governor’s sweeping proposal goes far beyond targeting employers who offer no health insurance, and instead penalizes employers who already offer high-quality insurance coverage to their employees.

It appears that money, not fairness, is driving the new fair-share assessment.

The administration plan would impose a $2,000-per-employee fee upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, and that do not make a minimum contribution of $4,950 annual contribution for each full-time worker. If 70 percent of a company’s employees accept company health insurance, the company would be assessed $2,000 per employee for the number of employees represented by the 10 percent difference.

The employer assessment, which would bring an estimated $300 million into state coffers, represents a revival of the so-called fair share contribution plan that was a linchpin of the 2006 universal health care law in Massachusetts before it was repealed to make way for the federal Affordable Care Act. The state employer mandate was repealed in 2013 as lawmakers and former Gov. Deval Patrick worked to bring Massachusetts into compliance with federal health-care reform.

AIM asked multiple employers of varying sizes to determine whether they would be subject to an assessment under the governor’s plan. Every one of the companies, from small manufacturers to international financial institutions to corner retailers, reported that they would face assessments. Most fell short of the 80 percent threshold because of employees using spousal health plans or because of the calculation of full-time equivalent employees.

“There is widespread concern among responsible employers that they are being dragged into an assessment intended for companies that provide no health coverage,” said Katie Holahan, Vice President of Government Affairs at AIM.

Holahan said AIM has developed an online calculator that will allow employers to determine how much they might owe under the governor’s proposal.

AIM opposes the employer assessment because the growing shortfall at Masshealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable solely to problems arising from the federal Affordable Care Act (ACA), a law that may well be repealed by the time Massachusetts solves its Medicaid problems. 

ACA made access to health insurance an entitlement based on expanded income eligibility.  Under the Massachusetts health care reform law of 2006, employees who were offered employer-sponsored health insurance were ineligible for MassHealth.  The ACA reversed that policy and allowed employees to decline employer coverage and still seek insurance through MassHealth.

The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden.  ACA made it an economically rational choice for eligible residents.

As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years – the high cost of health care coverage in this state threatens the underpinnings of the state economy.  This challenging moment underscores the fact that policymakers have concentrated too heavily on access issues instead of controlling the cost of health insurance, and now face a renewed imperative to lower costs for everyone in Massachusetts.

AIM looks forward to working with the administration and the Legislature to find a fair solution to the commonwealth’s challenging health-care financing issues.