More and more Massachusetts residents are signing up for MassHealth, the state’s Medicaid program — an average of 6,000 new people every month since mid-2015. And this really shouldn’t be happening, not when the economy is humming and Obamacare is long since implemented.
MassHealth is supposed to be a safety net program, providing health insurance for the poor, the long-term unemployed, and other folks who have difficulty getting private insurance. If anything, need should be decreasing right now, with wages rising and the state’s unemployment rate below 3 percent.
So why is MassHealth growing? Partly because a growing number of people are no longer getting insurance from their employers. Newly released information from the governor’s office shows a big jump in the number of full-time workers lacking employer-provided insurance since 2011.
Other sources point in the same direction, including Census data showing a sizeable increase in the number of Massachusetts residents without employer-based coverage. That’s unusual. Across the US, employer-provided coverage has actually gotten more common in recent years.
Two things especially stand out about the decline of employer-provided insurance in Massachusetts.
By the governor’s own numbers, this isn’t about businesses that refuse to provide insurance benefits. Fully two-thirds of the increase in full-time workers without employer-provided insurance came from people who turned down their company plans. Having said that, MassHealth is a pretty bare bones program in many coverage areas. So if people are turning down an employer-provided alternative, it’s likely because the package has high premiums, limited protections, or other deficiencies.
Also, there’s an indication that small businesses are playing a particularly important role. The number of people covered by private, small-group insurance plans — the kind of plans you would get through a small business — has been in continuous decline since the end of 2013, according to the Center for Health Information and Analysis, which is the state’s health care statistics agency.
From one perspective, this shift from employer-coverage to MassHealth may not be such a bad thing. MassHealth is an extremely efficient health insurance program, which has done a good job limiting per-person costs in an era where health care costs have been increasing quite rapidly. If everyone in the state moved to MassHealth, it would effectively create a state-run, single-payer insurance program — the kind of approach favored by the progressive wing of the Democratic Party.
But there is a problem. When people move from employer-sponsored coverage to MassHealth, the state has to pay — while the employer gets a windfall. The exact cost is tough to estimate, since it depends on how much health care the new enrollees need and how much the federal government chips in. But the ever-growing expense of MassHealth has been one of the biggest contributors to the state’s chronic budget shortfalls.
To compensate, the state has a few options. Governor Baker outlined one approach in his recent letter to Congress, using various tax breaks to encourage small businesses to provide health insurance directly or help their employees purchase individual plans outside of MassHealth.
As an alternative, the state could impose a penalty on businesses whose employees are on MassHealth or other publicly-funded insurance programs. Massachusetts used to require all but the smallest businesses to provide insurance, but that rule was superseded by an Obamacare regulation that only applies to businesses with over 50 employees — and that has never really been implemented.
What’s particularly tricky about Massachusetts’ predicament is that a lot depends on the future of Obamacare, and nobody knows what that will bring. Ultimately, though, unless Massachusetts can reverse the slide in employer-provided insurance, or find the revenue to cover MassHealth’s ongoing expansion, the state budget may be forever held hostage to rising health care costs.
Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the U.S. He can be reached at email@example.com. Follow him on Twitter @GlobeHorowitz