The 2018 Budget: MassHealth

Budget-busting MassHealth, the behemoth state-funded medical cost assistance program, is a crucial focus in this year's budget debate. 

Medicaid, the largest program within MassHealth, eats up about 41% of the state budget. Enrollment in the program, meant to be a last-resort choice for the uninsured, has grown by 70% since 2007. According to the House budget proposal, next year it will increase by $322M. 

To deal with the costs of MassHealth, the budget submitted to the legislature by Governor Baker included an employer tax of $2,000 per employee levied on businesses whose private health insurance covers fewer than 80% of its workers. While the Governor's reasoning is understandable, MassFiscal opposes penalizing businesses who are, in fact, offering coverage.

At the heart of the debate is finding a way to encourage people to use private insurance when available, not MassHealth. The administration's solution targets the employers. From our perspective, it makes more sense to rein in an out of control subsidy program. 

Among the "fixes" offered is a well-intentioned bad idea from State Representative James Arciero, of Westford. Arciero filed an amendment calling for a “hardship waiver” for businesses which serve populations using MassHealth. Rep Arciero’s well-intentioned bad idea would not address the problem of employees choosing MassHealth over private insurance or how to pay for the rising healthcare costs at MassHealth. Instead, his proposal would add more of a burden to the system by adding a new class of people exempt from providing quality health care to workers. Rep. Arciero, whose experience before becoming a lawmaker was working as a legislative aide, is an example of big-government thinking at its worst. It solves nothing, and makes the problem bigger.

A better idea, offered by State Representatives James Lyons and Marc Lombardo (amendments #876 and #914), calls for a temporary Fiscal Management Control Board (FMCB) to take over MassHealth. The board would apply private-sector bottom-line thinking to the out-of-control growth at MassHealth. A similar board has produced dramatic results at the MBTA. Already the MBTA’s FMCB has enacted measures expected to save the state $400M over 10 years, while increasing ridership and revenue.

Rep. Lyons also proposed an amendment (#878) aimed at reducing MassHealth’s costs by levying a fee on MassHealth plans for households earning more than the federal poverty level. The fee would be calculated on an income-based sliding scale. The more you earn, you more you pay for your government subsidized healthcare. The fee would help protect services for the most needy. 

Another Lyons amendment (#880) would limit spending on MassHealth to 30% of the state budget. Currently, spending is unlimited, and we all know how effective a blank check is at controlling costs.

We’ll continue updating you on the budget as it makes its way through the House and Senate.



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