The Massachusetts business community has agreed to support a broad compromise plan to stabilize the Massachusetts Medicaid and Unemployment Insurance systems while offseting a two-year employer health-care assessment with savings elsewhere.
The complex agreement, developed after months of intensive negotiations between the Baker Administration and the business community, would make structural changes to the MassHealth program to reduce ongoing financial shortfalls in the state/federal insurance program for low-income people. There would also be cost-saving changes to the commercial health-insurance markets, including increased incentives for patients to seek care at high-quality community hospitals.
The plan would use a temporary employer health assessment as “bridge financing” to capitalize the MassHealth program until the long-term reforms are implemented. The assessment would raise $200 million annually through 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 offset by a two-year Unemployment Insurance rate adjustment that would save employers $335 million over two years versus current rates.
The administration announced the agreement today in a letter to the chairs of the Legislature’s Joint Committee on Ways and Means.
“The comprehensive plan moderates the employer assessment that was originally proposed in January while offering the opportunity for meaningful structural reforms to the health insurance system and rate relief within the Unemployment Insurance system,” said Richard C. Lord, President and Chief Executive Officer of AIM.
The compromise will require approvals both from the Massachusetts Legislature and from federal officials.
Here are the key elements of the agreement:
- Moves 140,000 people who are above the federal poverty level out of Masshealth and into the Connector market;
- Restructures MassHealth coverage for non-disabled adults to look like commercial insurance coverage;
- Shifts 30,000 MassHealth members from standard MassHealth coverage, which includes coverage for long-term care, into Careplus, which does not;
- Adds co-pays for MassHealth members;
- Requires the commonwealth to petition the federal government to re-establish the prohibition against employees who are offered affordable health insurance by an employer from seeking coverage through MassHealth.
Commercial Market Reforms
- Imposes a five-year moratorium on insurance mandates (requires change to state law);
- Increases the required premium differential for tiered network plans from the current 14 percent to 28 percent. (requires state law change);
- Promotes transparency tools for employers and consumers. (requires state law change);
- Increases access to lower-cost providers by expanding the scope of practice for optometrists, podiatrists and advanced practice registered nurses (APRN) and creating a new mid-level provider - dental therapists. (requires state law change).
- Applies to employers with six or more employees (both full and part-time);
- Increases the EMAC contribution rate for all employees, statewide. Additional annual two-tiered assessment on any employees receiving health insurance through public programs.
- Tier 1 is broad based, raising the current EMAC rate from 0.34 percent to 0.51 percent of annual wages, up to the annual wage cap of $15,000. Applies to all employers currently subject to EMAC; raises the maximum per-employee contribution rate from $51 to $77; state expects to annually collect $75M under this tier;
- Tier 2 introduces a targeted payment that would require employers to pay an additional 5 percent of annual wages for each non-disabled employee on public coverage, up to the annual wage cap of $15,000; applies to all employers currently subject to EMAC with non-disabled employees on MassHealth (not in premium assistance) or subsidized Connector coverage (ConnectorCare); Tier 2 would result in an annual maximum per employee contribution rate of $750; state expect to collect an estimated $125M in Fiscal Year 2018 under this tier; the estimate is dependent upon the actual number of individuals on public coverage.
- Waiver applies for anyone receiving insurance through parent, spouse or other household member;
- Implementation date of January 1, 2018 and a sunset date two years later.
- An automatic increase of three levels to schedule F due to take effect on January 1 would be replaced with a one-level jump to schedule D for 2018 and another single increase to schedule E for 2019.
Governor Baker in January proposed to close a $600 million shortfall in MassHealth by levying 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, or do not make a minimum contribution of $4,950 annual contribution for each full-time worker. AIM opposed that plan because it would penalize the majority of companies that provide good health insurance to their workers.