BOSTON — Republican Gov. Charlie Baker planned to sign off Wednesday on a new $200 million health care assessment on Massachusetts employers, pulling back from his earlier insistence that lawmakers tie the fee directly to cost-saving measures in the state’s Medicaid program.
“We’re going to take the Legislature’s word for it that they are serious about dealing with this issue and we believe signing this is the best way to support this,” Baker said, after weighing and rejecting the option of a veto.
The two-tiered fee will increase the existing employer medical assistance contribution, known as EMAC, from $51 to $77 per employee for most businesses. But under the plan employers would have to pay a much higher contribution of $750 for workers who are enrolled in MassHealth, the state’s Medicaid program.
The governor had proposed the $200 million assessment along with a package of reforms aimed at saving an additional $150 million from MassHealth, the state’s Medicaid program that provides health insurance to 1.9 million Massachusetts residents. MassHealth consumes 40 percent of the entire state budget and the program’s costs have been escalating at rates well above state revenue growth.
The Legislature included the new EMAC fee in the budget for the fiscal year starting July 1, along with a pared down increase in unemployment insurance rates paid by businesses, but lawmakers said they needed more time to review the broader Medicaid changes. Baker initially refused to sign the fee absent the changes and demanded the return of the full package — or something similar — to his desk within 60 days.
His decision to now sign the assessment averts a protracted veto showdown with the Legislature. But it leaves uncertain the fate of the Medicaid proposals and risks angering business groups that had endorsed the health care fee only after it was coupled with the other changes.
“Yet again Beacon Hill has found a way to penalize the business community,” said Chris Carlozzi, Massachusetts director of the National Federation of Independent Businesses, in a statement Wednesday. “It’s incredibly disappointing to learn that all substantive reforms have fallen by the wayside and a tax on job creators in Massachusetts will remain.”
The administration is seeking to shift about 140,000 non-disabled adults with incomes above 100 percent of the federal poverty level from MassHealth to the state’s subsidized ConnectorCare program. Another so-called “gate” provision would bar most people with access to employer-sponsored health plans from enrolling in Medicaid.
Baker has pointed to the growing enrollment of working, able-bodied residents in MassHealth, often because they are not offered health insurance benefits by their employers or because what is offered is less generous than the government program.
Some Democrats, including gubernatorial candidates Jay Gonzalez and Setti Warren, have argued that many low-income families would have to pay more for coverage and lose benefits such as dental care if forced off MassHealth and into subsidized insurance plans.
Baker’s Secretary of Health and Human Services, Marylou Sudders, indicated Tuesday the administration was willing to negotiate with the Legislature and tweak its plan.
The governor expressed confidence lawmakers would ultimately act, pointing to public statements from Democratic leaders acknowledging the need to control MassHealth costs, especially given the continued uncertainty in Congress surrounding health care and federal Medicaid reimbursements.
“They are acutely aware of the fact that if we can’t come up with a way to manage this program effectively and continue to cover people … it will crowd out opportunities to invest in education and transportation and other areas that are important,” Baker said.