Governor Charlie Baker and state business leaders seem to have reached a compromise on the thorny question of how to deal with companies that shunt employees onto MassHealth, the state’s Medicaid program. There will be fines, though not as steep as Baker originally proposed, and only for a limited time.
Whether the Legislature embraces this deal remains unclear, but there are other concerns that may need to be addressed.
First, this whole fine-companies-for-overburdening-MassHealth approach now seems like a solution in search of a problem, with MassHealth enrollment having stabilized in recent months.
Second, it could actually end up increasing health care expenses in the state, because restricting access to MassHealth is like forcing people to shop only at luxury stores.
Let’s take these one at a time, starting with the lost rationale.
Back in January, when the governor first floated a proposal to fine companies whose employees used MassHealth, he was responding to what looked like a real crisis. MassHealth enrollment seemed to be on an unsustainable upswing, having risen dramatically through much of 2016. And while there was never a definitive report on the matter, signs suggested small-business workers were perhaps turning down company plans and choosing to enroll in MassHealth.
But what went up has since come all the way down. The most recent figures suggest that MassHealth covers as many people today as it did in late 2015 — 1.85 million — and no more. If anything, average growth since the implementation of President Obama’s health care law (and the state’s connector disaster) has been slower than it was during the decade from 2003 to 2013.
In that sense, it’s not clear the state really needs a new employer penalty.
Perhaps what’s needed is a whole new perspective. Instead of shaming companies whose employees use MassHealth, perhaps we should encourage more companies to follow suit — by creating a buy-in option where companies and workers could skip the private insurance market and instead pay a reasonable amount for MassHealth coverage.
Why might this be a good idea? Consider a simplified example. Imagine if your kids’ school announced that it would no longer supply pencils; instead, each child would be responsible for bringing their own.
Such an approach might help the school itself save money, but the community as a whole would probably end up spending more. Parents would be stuck paying retail prices, far higher than what the school could get for bulk purchases.
Faced with a “bring your own pencil” rule, parents would be well served to respond: “No, you keep buying the pencils, and just charge us our share.”
Likewise with health care. At least with the current system of price opacity and misaligned incentives, it’s much cheaper for the state to run a centralized health insurance program than it is for each of us to go out and buy private insurance — or even employer-sponsored insurance.
Medicaid programs like MassHealth are extremely efficient, providing fairly good coverage at very good rates.
Instead of writing big checks to doctors and insurance companies, we’d all be writing slightly smaller checks to the Depart-ment of Revenue.
Nationwide, Medicaid costs 20 percent less than private insurance, when you compare people with similar health needs.
Here in Massachusetts, MassHealth has been a standout when it comes to keeping costs down. Even as overall spending on health care has gone up roughly 4 percent in recent years, per person spending on MassHealth actually dropped in 2014 and 2015.
So if we want to solve the health care cost crisis in this state, the real answer may be more MassHealth, not less. Perhaps even Medicaid for all.
Of course, the school does still have to pay for those pencils. In Medicaid-for-all land, overall health spending would likely go down but our state government would end up shouldering a much bigger share of the burden. For that, they’d need tax dollars, premium charges, maybe an employer buy-in.
Instead of writing big checks to doctors and insurance companies, we’d all be writing slightly smaller checks to the Department of Revenue.
And while trust in government may not be high enough for us to make this kind of grand switch, that doesn’t change the underlying economics.
Whenever the state discourages people from using MassHealth — as Baker’s proposal aims to do — it risks increasing the total amount of money spent on health care in Massachusetts.Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the United States. He can be reached at firstname.lastname@example.org. Follow him on Twitter @GlobeHorowitz.