Massachusetts employers bracing for a 40 percent average increase in Unemployment Insurance taxes January 1 may face additional assessments after a state panel meets tomorrow to address a $70 million deficit in the fund that provides medical insurance to unemployed people.
The Unemployment Health Insurance Rate Review Board could decide to increase employer assessments to keep the Medical Security Trust Fund solvent at a time of persistently high unemployment. Massachusetts increased the assessment from $16.80 to $33.60 per employee for 2010, but officials suggest that the rate may have to increase again to $50.40 per employee or more for 2011 to keep the fund above water.
AIM favors eliminating the Medical Security Trust Fund because it duplicates the services offered under the 2006 Massachusetts Health Care Reform law. The Commonwealth Care program created under health reform allows individuals who have lost their jobs and income to purchase short-term health insurance through the Commonwealth Connector Authority.
AIM has filed bills in each of the past three legislative sessions to eliminate the Medical Security Trust Fund. The association believes that the commonwealth would not be staring at the current deficit if lawmakers had recognized the duplicative nature of the fund and eliminated it in 2006.
“Why would we raise assessments on struggling employers for a program that provides a service available elsewhere?” said Eileen McAnneny, Senior Vice President of Government Affairs at AIM.
McAnneny said AIM would support revising the eligibility requirements for Commonwealth Care to state explicitly that unemployed people could use the system.
The Medical Security Trust Fund should also be eliminated, AIM believes, because lawmakers during better economic times used the fund to pay for programs unrelated to health care for the unemployed.
Gov. Deval Patrick’s budget chief, Jay Gonzalez, confirmed earlier this year during a public meeting that the administration was considering merging the Medical Security Trust Fund with Commonwealth Care.
“Over the long-term I think we need to consider all options,” Gonzalez said, as reported State House News Service.
But the administration has not disclosed its position on the merger more recently.
The possibility of increased medical security assessments comes as AIM works with the Patrick administration to find ways to ease the average $258-per-employee Unemployment Insurance increase set to hit Massachusetts businesses. Analysts fear an increase of that magnitude could suppress job growth and create even more demand in the unemployment system.
Projections from the Massachusetts Division of Unemployment Assistance show that the Unemployment Insurance Trust Fund, which ran a balance of more than $2 billion prior to the recession, will begin 2011 some $202 million in the red. That deficit would trigger a move to the highest rate schedule permitted under Massachusetts law, raising the average UI cost per employee from the current $646 to $904.
A move to schedule G would increase total contributions from Massachusetts employers from $1.576 billion to $2.235 billion.
Meanwhile, AIM joined business organizations from throughout the country in November to ask Congress to continue to waive the interest on loans used by Massachusetts and 31 other states to pay unemployment insurance claims. AIM also asked Congress to waive penalties under the Federal Unemployment Tax Act levied on employers in states borrowing from the federal government to meet their obligations to jobless workers.