Understanding Baker’s Health Care Package

At the end of June, Governor Charlie Baker introduced a health care package that boasted Medicaid (MassHealth) reform and cost savings in an especially tight budget year. At a glance, the proposal seemed like a standard Republican response to the current financial state of the Commonwealth, but after a closer look, juxtaposed with Baker's generally supportive views of the Affordable Care Act nationally, it paints a bleak picture for working families in Massachusetts.

If you have any additional questions, feel free to contact my Legislative Aide, Caitlin Duffy (Caitlin.Duffy@mahouse.gov)

What did Baker's original MassHealth plan contain?

The Governor's Health Care Reform Package introduced this Summer served as a Phase 2 of a larger reform. Phase 1, which was supported by the Obama Administration, was an effort to transform much of MassHealth (the State's Medicaid program) into "accountable care organizations." According to Commonwealth Magazine, Accountable Care Organizations (or ACO's) aim to focus hospitals, physicians, and other providers on improving population health, care integration, and efficiency. Back in November, days before the election of President Trump, Massachusetts was awarded a grant by the Obama Administration to carry out the program, which aligned with the out-going administration's mission to move US health care away from expensive fee-for-service payment and toward value-based financing that rewards quality and efficiency.

Gotcha. But what is included in Phase 2 of the Health Care Package? More Obama approved reforms?

Unfortunately, no. Phase 2 of Baker's plan is a bit more complex and requires more focus. It includes 5 key changes:

  1. Temporarily reestablishes employer responsibility for health insurance through two new assessments.
  2. Closes access to MassHealth for otherwise income-eligible individuals and families who have access to affordable coverage through their employers.
  3. Seeks to transfer 140,000 lower-income, non-disabled adults from MassHealth to the ConnectorCare program, as well as transfer 230,000 non-disabled parents and caretakers from MassHealth Standard to CarePlus, effective January 1, 2019.
  4. Seeks to align MassHealth benefits more closely with those of commercial insurance plans by encouraging limited network products, by eliminating non-emergency transportation to medical appointments, and by using commercial tools such as closed formularies in selecting outpatient drugs.
  5. A series of reforms to state commercial insurance laws 
Okay, so what does this mean for employers?

Employers would be responsible for a higher rate of "Employer Medical Assistance Contribution" (EMAC) from $51m to $71m effective January 1, 2018. EMAC is what funds  subsidized health care to low-income residents of the Commonwealth. Finally, Employers will be required to pay 5 percent of annual wages for each non-disabled employee who obtains public health insurance coverage (from MassHealth or the Massachusetts Health Insurance Connector), up to the annual wage cap of $15,000, or $750 maximum. 

This is bad news for business, but the Baker administration lessened the pain by a $334 million drop in the unemployment insurance rate schedule to make up for it. That deal is likely why groups like the Associated Industries of Massachusetts and the Massachusetts Taxpayer Association are on board with this plan. Also, the assessments would be only effective for 2 years.

Interesting. I've heard people talking about "employer assesments" before. What are they and what is their significance?

Employer Assesments are reports submitted by companies regarding the health care plans that they offer and the eligibility percentage of current employees. Unless you're incredibly interested in all things Health Care Policy, you probably first heard the concept mentioned back in 2006 during Massachusetts's Universal Health Care debate. The Affordable Care Act also included an employer responsibility assessment, set to take effect in 2014, but it was never implemented. Anticipating the ACA assessment, Gov. Deval Patrick and the Legislature repealed the 2006 mandate in 2013. Baker proposed a more costly assessment last January, which is part of the reason why businesses are on board for these reforms.

That's great for businesses, but what does the package change for families and individuals already on MassHealth?

Well, this is where Baker's policy gets a little bit more treacherous. This plan would close access to otherwise income-eligible individuals and families who have access to healthcare plans deemed "affordable" by the government at their current job. The trouble is that health care costs add up and this could be seen as a huge burden on working people. Advocates worry that many low-income adults will be dropped from coverage, though the Baker Administration claims that they will provide assistance to those affected in finding affordable coverage. Until this assistance is proven to be adequate, moving ahead on this policy would be incredibly risky for vulnerable families and individuals.

 

What about the 140,000 people that would be shifted from MassHealth to Connector Care, or the 230,000 non-disabled parents and caretakers that would be shifted from MassHealth Standard to Care Plus? Should they be worried?

When you look at what would theoretically qualify a person to be deemed eligible for MassHealth in this regard, the 140,000 individuals especially should be alarmed. These are all people whose income is 100 to 138 percent of the federal poverty level. In other words, you'd have to be a lot more poor to qualify for MassHealth and families that fall between those benchmarks would have to rework their financial situation to afford subsidized care (which, can truthfully be costly). The disparity gap between plans becomes a significant hurdle for working families. The loss of coverage could also affect MassHealth recipients with dental plans and other elements crucial to caring for one's health that may not carry over to ConnectorCare.

It's important to remember that the poverty level is calculated on a national level.  It does not account for higher cost states, like Massachusetts, or higher cost cities, like Boston or Cambridge.

 

Okay. Well, what about the steps Baker is making to make MassHealth look more like Commercial models of insurance?

The Baker administration seeks to do this with MassHealth by encouraging limited network products, eliminating non-emergency transportation to medical appointments, and using commercial tools such as closed formularies in selecting outpatient drugs.

What about his efforts to reform Commercial Insurance? What would that entail?
  • Imposing a 5-year moratorium on new health insurance mandates;
  • Providing consumers with price information for common procedures and services;
  • Increasing premium differentials for tiered network insurance plans from 14 percent to 28 percent; and
  • Expanding the scope of practice for nurse practitioners, optometrists, and podiatrists, while creating a new mid-level provider called “dental therapist.”
This sounds like it could be devastating to families on MassHealth. What's the pay off? How much does the governor claim that the State would save if we did this?

Baker's team claims that these reforms would save $314 million in fiscal year 2018, which starts July 1, and more beyond. Those savings would be great, but it seems to be on the backs of the working poor in Massachusetts.

Well, what does Jay think about these changes?

As an advocate for working families and individuals, I was incredibly disturbed by Baker's proposal and the lack of public process in determining the details. It felt like businesses and insurance companies got a seat at the table whereas MassHealth recipients did not get to voice their input/concerns. I understand that this was and remains to be a tight fiscal year, but I do not believe that working families and individuals should be first on the chopping block at their expense. After hearing about the proposal and getting sense of a momentum on the issue, I teamed up with Representatives Barber and Balser to pen an op-ed in Commonwealth Magazine about these changes. I've been part of a vocal opposition to any changes made to balance the budget on the backs of the working poor. 

Alright. What happens now? Is this a done deal? What can still be done?

Recently, the House rejected the Governor's MassHealth Reform package in the form of a budget amendment, 41-116, with seven Democrats joining all but one Republican in supporting the governor’s plan. The Senate followed suit on a party-line vote of 6-31. One more vote is required in the Senate to return the budget sections without MassHealth reform to Baker. Baker will have to choose whether to accept the employer assessments without reforming MassHealth and risk alienating the business community, or veto the assessments and I will continue to fight against any similar proposals that would leave the people of Massachusetts without the health care support they need at this time of uncertainty at the federal level.  I am currently working with other representatives on solutions to MassHealth costs that do not involve cuts to benefits or services.

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