After a backlash from the business community, Governor Charlie Baker is floating a new plan for employers to help cover the state’s soaring health care costs.
But the proposal, an alternative to the one the administration included in its January budget proposal, still lacks broad support among businesses.
Baker initially called for an assessment of $2,000 per employee for companies with more than 10 workers whose health insurance offerings don’t meet a set of state requirements. The levy would raise an estimated $300 million a year to help fund the state Medicaid program, called MassHealth, which provides coverage to low-income residents. Employers quickly slammed that proposal as a hugely expensive and unfair tax.
The new proposal, which administration officials discussed with business leaders in recent days, would apply to many more businesses but would require them to pay less. It would increase an existing assessment, called the Employer Medical Assistance Contribution, which applies to employers with six or more workers. In exchange for contributing more toward the cost of MassHealth for two years, unemployment insurance rates would be frozen for the same period.
The revised plan would raise an estimated $200 million a year — $100 million less than the earlier proposal, according to people involved in the discussions.
Employer groups are divided on the new plan. The Greater Boston Chamber of Commerce said on Thursday that the group opposes the revised plan because it still hits businesses with an unfair new penalty.
“This new proposal would tax virtually all employers in the state to close a budget gap, while the underlying problems of rising enrollment in and costs of MassHealth would remain,” Chamber president James E. Rooney said in a statement. “We agree that these problems must be addressed through continued dialogue and further analysis of the true drivers of the growth in MassHealth expenses, however, penalizing employers who provide their employees with good quality health care benefits should not be part of the solution.”
Associated Industries of Massachusetts did not comment publicly on its position but it shares the chamber’s concerns, according to a person with knowledge of the matter.
The Retailers Association of Massachusetts, the National Federation of Independent Business, and the Massachusetts Nonprofit Network, meanwhile, indicated support for the administration’s new idea.
“It is 100 percent preferable to the original plan,” said Jon B. Hurst, president of the retailers association.
“At this point this is the best plan I’ve heard,” said Bill Vernon, state director of the NFIB. “The original plan was very dangerous for small businesses.”
Administration officials say employers should contribute more to state health care costs because hundreds of thousands of residents in recent years have moved from employer-sponsored health coverage to taxpayer-funded MassHealth. But employer groups said Baker’s initial proposal would go too far, punishing even those companies that offer good health benefits to their employees.
MassHealth insures about 1.9 million people and accounts for about 40 percent of state spending.
“The Baker-Polito administration has engaged various stakeholders in the health care and employer community to discuss the best way to protect Massachusetts’ health care system given the recent shift in the insurance marketplace resulting in a surge in Mass Health enrollment,” Baker spokeswoman Lizzy Guyton said in an e-mail. “Since the budget was proposed, members of the administration have stated repeatedly they are open to alternatives to protect taxpayers from paying for thousands of private sector workers’ health insurance, while maintaining Massachusetts’ leading health care system.”
The new proposal would apply to more businesses but require them to pay less
The administration’s latest proposal was first reported by the State House News Service.
It’s uncertain which, if any, new health care proposals will be implemented. The state budget still needs approval from legislators. Budget discussions are happening as President Trump and Republicans in Congress push health care legislation that could result in steep new funding shortfalls for Massachusetts’ Medicaid program.Priyanka Dayal McCluskey can be reached at firstname.lastname@example.org. Follow her on Twitter @priyanka_dayal.