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AIM Calls for Long-Term Cost Changes to MassHealth

Posted by Rick Lord on Jul 25, 2017 2:19:20 PM

Editor's note - Associated Industries of Massachusetts President Richard C. Lord submitted the following testimony today to the Legislature's Joint Committee on Ways & Means and Joint Committee on Health Care Financing urging lawmakers to approve long-term structural changes to the state Medicaid program. AIM's Katie Holahan (above) delivered the same message in testimony before the committees.

On behalf of Associated Industries of Massachusetts (AIM) and its 4,000 employer-members statewide, thank you for your continued engagement with the employer community on the difficult issues before you today. We are pleased that both committees have so promptly scheduled this hearing and the second hearing scheduled for this afternoon. 

AIM supports the language contained in Governor Baker’s amendment to the Fiscal Year 2018 budget, returned to you within Attachment F.  The amendment contains a complex agreement that was developed after months of intensive negotiations between the Baker Administration and the business community. We believe the comprehensive plan moderates the proposed employer assessment by coupling it with meaningful structural reforms to the public health insurance system and rate relief within the Unemployment Insurance system.   

It is vital to maintain all aspects of this package so we will not find ourselves addressing an even larger MassHealth budget deficit in two years than the one we confront today. 

AIM likewise supports language authorizing the Baker Administration to seek a federal waiver allowing Massachusetts to return to policies implemented within the 2006 Health Care Reform law, and to expand the scope of practice for certain health-care providers to facilitate lower-cost care. 

The 2006 reform law made employees who were offered employer-sponsored health insurance ineligible for MassHealth.  The intent was to balance the requirement that employers do their “fair share” in offering health insurance with concerns about the financial burden on the MassHealth system.  The Affordable Care Act (ACA) reversed that policy and allowed income-eligible employees to decline employer coverage and 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.  The ACA made public health insurance an economically rational choice for eligible residents in a state known for its expensive health-care system.   

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 our economy.  Policymakers who have concentrated almost exclusively on access and coverage now face a renewed imperative to lower the cost of health insurance for everyone in Massachusetts. 

AIM member employers are proud to lead the nation in providing health care coverage to their employees. Sixty-five percent of Bay State companies offer health insurance coverage to their workers, compared with 56 percent of employers nationwide. A full 100 percent of Massachusetts employers with 200 or more employees offer coverage.1 

The 4,000 member employers of AIM provide health insurance to the majority of residents in the commonwealth. 

But providing that coverage has financial consequences. 

According to the most recent data available from the Centers for Medicare and Medicaid Services (CMMS), Massachusetts was the second highest-spending state for health care in 2014, 30 percent more than the national average. Personal health-care spending in Massachusetts, per capita, has increased more than 12 percent in five years – from $9,417 in 2009 to $10,559 in 2014. Cost growth like this is unsustainable and has accelerated in the face of attempts by both employers and the commonwealth to contain it. 

Businesses, in fact, have almost nothing to show in the way of cost savings and efficiencies five years after Massachusetts’ major push toward health care cost containment. 

The commonwealth has exceeded the 3.6 percent health spending growth benchmark in two of the past three measurement periods. Total Health Care Expenditures (THCE) grew by 4.2 percent from 2013 to 2014, and by 4.1 percent from 2014 to 2015. 2 

These cost increases are occurring in an industry in which experts agree that at least a third of all care is unnecessary – delivered in the wrong setting; marked by a lack of coordination; provided with an inadequate emphasis on prevention; harmed by medical errors; burdened with rules and fraud; or just plain excessive.  

Now, the employer assessment means that business is expected to shoulder the escalating costs of the public healthcare system, as well.  More importantly, they are being asked to close the MassHealth deficit absent any of the  long-term structural reforms needed to solve the underlying financial problems with the program. 

Eleven years ago, employers joined with doctors, hospitals, patient advocates and lawmakers to forge a health-reform law that required all parties to share the responsibility for improving access to health care. The employer community calls for that same sense of shared responsibility now to solve the MassHealth shortfall. 

Thank you for considering AIM’s views and please feel free to contact me if you have any questions or need any further information.  

Topics: Massachusetts state budget, Controlling Health Care Costs, Employer Health Assessment

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