Charlie Baker, Health Care

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PHASE 2 OF THE BAKER ADMINISTRATION’S ambitious health reform agenda emerged this past week. It contains good and smart proposals – and worrisome ones needing attention.

Phase 1 is an ambitious effort to transform much of the state’s Medicaid program, known as MassHealth, into “accountable care organizations.” ACOs aim to focus hospitals, physicians, and other providers on improving population health, care integration, and efficiency. That effort, blessed by the outgoing Obama administration last November, is well underway – unless congressional Republican efforts to repeal the Affordable Care Act throw everything into a tailspin.

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Phase 2 came last week, when the Baker administration released a set of proposals to Senate and House leaders, a package of changes to MassHealth and other health programs aiming to save $314 million in fiscal year 2018, which starts July 1, and more beyond. All the proposals need state law changes (to be incorporated in the nearly finished FY 2018 state budget) and/or federal approval.

Administration documents on the plan outline five key changes.

Increasing the maximum “employer medical assistance contribution” (EMAC), effective January 1, 2018, from $51 to $77 ($75 million in revenue in FY18).

Requiring employers to pay 5 percent of annual wages for each non-disabled employee who obtains public health insurance coverage (from MassHealth or the Massachusetts Health Insurance Connector), up to the annual wage cap of $15,000, or $750 maximum ($125 million in FY18 revenue).

First, it would temporarily reestablish employer responsibility for health insurance through two new assessments ($200 million in FY18 new revenue):

This bad news for business is balanced by a $334 million drop in the unemployment insurance rate schedule, explaining why leading business groups such as Associated Industries of Massachusetts and the Massachusetts Taxpayers Association have endorsed the package. And the assessments would only be effective for two years.

Employer responsibility was a small yet important part of the 2006 Massachusetts universal health care law. The Affordable Care Act also included an employer responsibility assessment, set to take effect in 2014 though never implemented (and now a repeal target in Congress). Anticipating the ACA assessment, Gov. Deval Patrick and the Legislature repealed the 2006 mandate in 2013. Well-heeled and prosperous Massachusetts businesses that have workers getting publicly subsidized coverage should pay their fair share of the cost.

It’s regrettable the deal is only for two years. But the Baker team is also proposing to again require employers to report health insurance plan offerings and employee eligibility (Health Insurance Responsibility Disclosure – HIRD), perhaps setting the stage for a longer-term requirement down the road. The deal imposes far less cost on employers than Baker’s proposed $2,000 assessment last January.

Second, the Baker plan would close access to MassHealth for otherwise income-eligible individuals and families who have access to affordable coverage through their employers ($76.5 million FY18 savings). This was state policy until the ACA mandated Medicaid access regardless of employer offer beginning in 2014. Advocates worry that many low-income adults will drop coverage. But Baker administration officials say they will provide premium assistance to these individuals to make coverage affordable. The Legislature should make sure that this commitment is fulfilled.

Third, the Baker plan seeks to transfer 140,000 lower-income, non-disabled adults from MassHealth to the ConnectorCare program, as well as transfer 230,000 non-disabled parents and caretakers from MassHealth Standard to CarePlus, effective January 1, 2019 ($88.3 million in FY19 savings; requires federal approval).

The latter move is causing less concern than the 140,000 moving from MassHealth to the Connector, which included many low-income people in its ConnectorCare program until 2014. These are all folks whose income is 100 to 138 percent of the federal poverty level. Other states such as Arkansas, Iowa, Michigan, have made similar moves. An important concern is the loss of dental care benefits they now receive, something the Baker administration needs to address.

Fourth, the plan seeks to align MassHealth benefits more closely with those of commercial insurance plans by encouraging limited network products, by eliminating non-emergency transportation to medical appointments, and by using commercial tools such as closed formularies in selecting outpatient drugs ($38.1 million in FY18 savings). Once again, some sensible protections such as an exception and appeals process can make this work effectively.

Imposing a 5-year moratorium on new health insurance mandates;

Providing consumers with price information for common procedures and services;

Increasing premium differentials for tiered network insurance plans from 14 percent to 28 percent; and

Expanding the scope of practice for nurse practitioners, optometrists, and podiatrists, while creating a new mid-level provider called “dental therapist.”

Finally, the plan includes a series of changes to state commercial insurance laws including:

Of the entire package, my personal favorite is the last, authorizing a new class of practitioners called dental therapists who provide basic dental services for disadvantaged and underserved populations in schools, nursing homes, and other community settings where dentists just can’t earn enough money to serve effectively. Dental therapists are already permitted to practice in other states. The Massachusetts Dental Society has successful blocked this reform for too long and it’s heartening to see this proposal.

Meet the Author John E. McDonough Guest Contributor

Perhaps excepting the last, all of these changes are budget driven, hence the drive to include them in the FY 2018 state budget. Because no open public process has been used, the Baker administration will get things wrong in spite of its best efforts. Altering health insurance coverage for 370,000 low-income citizens should not be a last-minute afterthought. It’s up to House and Senate leaders to provide meaningful opportunity for the public and their advocates to weigh in, as the business community was allowed to do.

John McDonough teaches at the Harvard Chan School of Public Health.

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