The state budget in Massachusetts appears to be facing a double whammy: surging enrollment and costs in MassHealth at a time when the federal government is poised to pull massive amounts of funding out of health care.
In a letter to members of the Massachusetts Congressional delegation, Gov. Charlie Baker estimated the American Health Care Act sponsored by leaders of his Republican party in Washington would result in $1 billion less in federal revenue for Massachusetts in 2020, $1.3 billion less in 2021 and $1.5 billion in 2022, “with likely a greater annual impact in the years that follow.”
Baker also raised new concerns about federal support for a health care waiver his administration negotiated with the Obama administration prior to the November election.
The governor, who has said since President Donald Trump’s election that he believed the agreement outlined in the waiver was not in jeopardy, said in his letter that the federal bill “would put at risk” so-called 1115 payments authorized under the waiver accord.
“By FY22, the Commonwealth estimates an additional $425 [million to] $475 million per year of reduced federal revenue in potential elimination of 1115 payments not captured under the per capita targets, including federal matching funds for a state-run ConnectorCare Wrap subsidy,” Baker wrote in his letter released Tuesday, March 21, by his communications office.
“The actual experience for these and other factors is significantly dependent on how the U.S. Department of Health and Human Services implements the legislation and unpredictable factors in the future (e.g., pharmaceutical growth).”
Read: Gov. Baker’s AHCA letter
Baker concluded, “Overall, our analysis indicates that the AHCA would increasingly strain the fiscal resources necessary to support the Commonwealth’s continued commitment to universal health care coverage.”
Republicans in Washington, D.C., on Monday night released amendments to the bill aimed at boosting the vote count behind it.
At a budget hearing in Roxbury Tuesday morning, Marylou Sudders, the Baker administration’s health and human services secretary, said “the projected fiscal impact for Massachusetts does not appear to be helped by the amendments that were filed [Monday] night.”
The debate in Washington may serve as a prelude to Beacon Hill debates over ensuring the state’s high insurance coverage rate and how to pay for that.
The administration’s estimates are based in part on applying Congressional Budget Office assumptions to Massachusetts. The $1.5 billion estimate of reduced federal funds in fiscal 2022 includes $1.3 billion of annual MassHealth federal revenue losses and $200 million in reduced federal subsidies for private insurance.
In Massachusetts, the likelihood that people will drop health insurance if Republicans in Washington are able to eliminate mandates on employers under the Affordable Care Act is reduced because of a state law requiring individuals to have health insurance.
“Massachusetts also has protective insurance coverage laws that would not be superseded by the federal legislation,” Baker wrote.
Hoping to move people off MassHealth and onto employer-sponsored health plans, the governor proposed levying a $2,000 per-employee assessment on businesses with 11 or more employees that don’t offer health coverage or that do not insure at least 80 percent of their full-time staff.
The proposal has received a mixed reception, with business organizations objecting to the assessment as an unfair new tax and a group of health providers, faith groups and unions cheering the idea. In his letter, Baker said the penalty “would be increasingly important” if the federal mandate is repealed.
In the letter, Baker did not stake out a position for or against the AHCA.
He concluded, “I hope this information is helpful to you as Congress takes up the American Health Care Act. My administration and I will continue to stay in touch with you as we work together to ensure access to quality, affordable health coverage for all Massachusetts residents.”
MassHealth enrollment has surged 70 percent since the start of Gov. Deval Patrick’s term in 2007, and there are nearly 2 million low-income, elderly and disabled individuals in Massachusetts covered under the program, which is paid for largely through a combination of state and federal tax revenues.
Check out: Center for Health Information and Analysis Enrollment Trends Report
The number of Massachusetts residents enrolled in subsidized private commercial insurance through the Massachusetts Health Connector increased 40 percent from September 2015 through September 2016, the state Center for Health Information and Analysis (CHIA) reported Tuesday.
Enrollment in individual Qualified Health Plans through the Connector surpassed 225,000 members from September 2014 to September 2016, according to CHIA, which said that was “the highest level since the redesigned health insurance exchange opened in 2014.”
[Colin A. Young contributed reporting]