Charlie Baker, Massachusetts Legislature, Taxes and Budget Issues

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STATE HOUSE NEWS SERVICE

BAKER ADMINISTRATION OFFICIALS on Tuesday urged lawmakers to get on board with reforms to rein in costs at MassHealth, but the House is poised on Wednesday to create a showdown with the governor by sending him back a $200 million package of new employer assessments and unemployment insurance rate relief without the MassHealth changes, according to two senior House officials.

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Facing considerable skepticism from many Democrats and health advocates concerned about potential negative impacts on low-income people, three top Baker administration officials urged the Legislature Tuesday to agree to the governor’s proposed MassHealth reforms, saying the program must be put on a more sustainable financial path and the state needs to act quickly to address growing costs.

Labor and Workforce Development Secretary Rosalin Acosta, Health and Human Services Secretary Marylou Sudders, and outgoing Administration and Finance Secretary Kristen Lepore represented the Baker administration at Tuesday’s hearing on proposed MassHealth reforms. [Photo: Sam Doran/SHNS]

But with House leaders preparing to ask members to reject the MassHealth reforms for now, the pressure will shift back on Gov. Charlie Baker who will have to choose between vetoing the assessments that he first proposed and are needed to pay for MassHealth in this year’s state budget or risk alienating the business community, which has balked at being asked to pay more without reforms to the state’s Medicaid program.

Following a major mid-summer public hearing in Gardner Auditorium, Senate leaders also announced that they would produce legislation in the early fall that “targets the core drivers of costs in the state’s health care system while aiming to improve health outcomes and maintain the Commonwealth’s historical commitment to universal coverage.”

Senate President Stanley Rosenberg’s office said the Senate would hold stakeholder meetings over the next month, including more “roundtable sessions” to continue vetting the governor’s MassHealth proposals and seek feedback on ideas senators have gleaned from other states as part of the branch’s work on cost-containment.

“A broader conversation will ensure that short-term fixes are not overvalued at the expense of the long-term sustainability and quality of our health care system, as well as our commitment to universal coverage,” Rosenberg said in a statement.

At the hearing, Health and Human Services Secretary Marylou Sudders said the administration’s proposal to shift tens of thousands of residents from MassHealth into other subsidized plans would not cut people off from health care access.

“Our proposal before you today continues the strong commitment to affordable health care coverage in the commonwealth of Massachusetts,” Sudders said. “I read somewhere recently that suggested we’re actually cutting people off for access and eligibility. Nothing could be farther from the truth.”

But the state needs to address underlying MassHealth costs and enrollment, Sudders warned, telling lawmakers they can help “lead the way” and should not wait for Congress to take action on health care. Sudders described a shift since implementation of the Affordable Care Act, with MassHealth enrollment growing and fewer people in employer-sponsored health care. Since 2011, there has been a “swing of about 450 to 500,000 lives” as MassHealth enrollment grew and commercial coverage declined, Sudders said.

Many health advocacy groups, including Health Care for All, expressed concern about the impact of rising out-of-pocket expenses for low-wage workers that could result from the proposal, but large business groups, including Associated Industries of Massachusetts, the Massachusetts Taxpayers Foundation, and the Retailers Association of Massachusetts, all testified in favor of the proposal that they helped negotiate.

The business groups, as a condition of not opposing $200 million in new, but temporary, assessments on employers to pay for MassHealth, supported the reforms as a means of freeing up additional state dollars to invest in education, housing, and other priorities.

And though Sudders balked at one lawmaker referring to it as a “deal” with employer groups, Katie Holahan, vice president of government affairs for AIM, told the committees, “It is vital to maintain all aspects of this package so we will not find ourselves addressing an even larger MassHealth budget deficit in two years than the one we confront today.”

Sudders was joined by Administration and Finance Secretary Kristen Lepore and Workforce Development Secretary Rosalin Acosta in addressing the House and Senate Ways and Means committees and the Joint Committee on Health Care Financing. The three Cabinet secretaries spent more than two hours before the panels, taking questions on the financial details, differences in coverage, anticipated timeline and other aspects.

The budget Baker signed last week already chopped $350 million from the MassHealth program, Senate budget chief Karen Spilka said, adding that she wants to learn more about the impacts on low-income individuals of “sweeping” additional health insurance changes proposed by the governor.

Spilka suggested Baker’s proposal was not the only avenue Beacon Hill could pursue to save on health care, pointing to a Senate working group that’s been studying cost-containment strategies used by other states and telling Lepore, “There may be other ways to do savings than all of the specific points in this package that was given to us at the tail end of the conference committee.”

“This is an ongoing issue and there are other ways to go about savings, rather than necessarily moving people off of MassHealth,” the Ashland Democrat said. She asked people who testified on the proposal to submit potential alternatives to the committee.

Baker on June 20 delivered budget negotiators a package of insurance reforms and temporary employer assessments, and the conference committee included the assessments worth $200 million while leaving out the MassHealth reforms. When he signed the budget July 17, Baker returned his suite of proposals to lawmakers, directing them to hold a hearing within 30 days and act within 60 days.

“The employer contribution provides necessary funding in the immediate term to address a funding shortfall in the MassHealth program, but will not provide the long-term reforms needed to protect taxpayers and preserve the health care safety net for those who need it most,” Lepore said.

She said the assessments would “act as a bridge while we are able to put more long-term changes and reforms in place.”



Tuesday’s joint hearing of the Ways and Means Committees and the Health Care Financing Committee filled Gardner Auditorium. [Photo: Sam Doran/SHNS]

Without the reforms and revenues Baker proposed, spending on MassHealth — which already accounts for 40 percent of the state’s nearly $40 billion budget — would increase by more than $300 million this fiscal year, Lepore said.

Mark Gallagher, from the Massachusetts High Technology Council, said “no policy or public expenditure issue currently pending in Massachusetts that will have greater impact on the Commonwealth’s immediate and long-term competitiveness, economic health, and fiscal stability than the Legislature’s prompt and favorable adoption of the significant reforms to MassHealth.”

Massachusetts Taxpayers Foundation President Eileen McAnneny, also testifying in support of the governor’s plan, expressed concern that spending on MassHealth has outpaced investments in programs such as subsidized child care 44 times over.

“We’re suggesting the state needs to free up resources so they can spend it on other priorities,” McAnneny said, arguing things like housing also impact people’s health.

Spilka, however, took issue with McAnneny’s suggestion that the state can’t afford to do nothing. “Nobody is talking about inaction right now, but the options aren’t necessarily the governor’s plan or inaction,” Spilka said.

Responding to Spilka’s question about whether MTF was “wedded” to the governor’s proposal or simply interested in finding cost savings, McAnneny said, “We are wed to the package,” before calling the changes reasonable in light of the fiscal challenges confronting the program.

“I would suggest that some people who would be losing their benefits don’t think they’re so reasonable,” Spilka responded.

The governor’s plan would move 140,000 non-disabled adults who earn between 100 percent and 133 percent of the federal poverty level from MassHealth to ConnectorCare plans through the Massachusetts Health Connector. It would also shift certain non-disabled adults and caretakers from MassHealth Standard to MassHealth CarePlus, which Spilka said provides “similar but less extensive benefits.”

Baker also proposed a “gate” that would make non-disabled adults ineligible for MassHealth if they can access affordable coverage through their employers. The administration defines “affordable” as annual premiums that total less than 5 percent of a person’s income and allows for exceptions in the case of financial hardship. Sudders estimated that the change would make 42,000 people newly ineligilbe for MassHealth.

Under the plan, affordable employer-sponsored coverage for a person earning $15,000 per year would have premiums of less than $750 annually, Sudders said. If the premiums were more, the person would either stay on MassHealth or receive premium assistance through the state if that were more cost-effective, she said.

Lawmakers voiced concerns that attempts to make health care costs more sustainable for the state could place more of a burden on individual consumers who become ineligible for MassHealth but may struggle to afford the copays in their new plans. No-premium plans would remain available to former MassHealth enrollees, though they may face higher co-pays or deductibles under their new plans.

“It seems that in Massachusetts the wealthy are getting wealthier and the working class poorer,” Rep. Peter Kocot, the House chair of the Health Care Financing Committee, said. “I don’t want to overstate that, but when I look at the 140,000 people that will be impacted by this proposal, I’m concerned that their out-of-pocket expenses, their copays, their general ability to access insurance is going to be impacted, so I think it’s very important for us to get that right.”

Sen. Michael Barrett, a Lexington Democrat, raised non-enrollment cost drivers such as inpatient care and pharmaceutical and medical device prices.

“I’m a little concerned that there’s an insistence that we put the eligibility of poor people ahead of the question of above-average charges by wealthy providers,” Barrett said.

Lepore pointed to the governor’s original proposal that called for growth caps on providers, which the Legislature scrapped in the budget, as well as separate legislation filed by the administration to encourage patients to utilize tiered insurance products that incentivize lower-cost providers.

“We’re not cutting benefits here,” Sudders added. The biggest benefit change would be the loss of dental coverage for the 140,000 shifted into Connector Plans. While dental coverage would be available through the Connector for an additional $29 a month, Sudders said people can also seek dental care through community health centers, which would be paid through the health safety net fund at no cost to the patient.

Rep. Tricia Farley-Bouvier spoke about the “cliff” that families sometimes reach as they try to work their way out of poverty, but reach a point where the loss of public benefits becomes a disincentive.

“It feels like this, we’re going in the wrong direction to try to smooth out that cliff, and I’m concerned about that,” she said.

Jay Gonzalez, who was Gov. Deval Patrick’s administration and finance secretary and is now running for governor as a Democrat, said Baker’s plan would put a new limitation on MassHealth eligibility that had not been in place before and urged lawmakers to reject it.

“We have been a leader in this state in terms of health insurance coverage,” Gonzalez told the committee. “We were the first state to provide universal coverage, and this is the wrong direction. Governor Baker’s making a choice here. He’s choosing to follow the lead of Republicans in Washington to reduce health care coverage in this state.”

House Ways and Means Chairman Jeff Sanchez pointed to uncertainty over health policy at the federal level as a reason lawmakers here need to carefully vet Baker’s plan or any other health care moves.

“This could all implode with a tweet, and we don’t know,” Sanchez said. “With the impending cloud before us, we need to be extra careful, and I understand the sense that we need to move it forward and get into the queue, but I don’t know.”

Rep. Steven Ultrino, a Malden Democrat, asked Secretary Acosta whether she was concerned businesses would cut the hours of their employees to get under the threshold of having to pay for health benefits. “I hope not because they would have to take into account their own productivity,” Acosta said.

Brian Rosman, of Health Care for All, told lawmakers that they should use their August recess to talk with MassHealth recipients about how the proposed changes would impact their health care decisions. Rosman said the non-disabled adult population on MassHealth has actually declined by about 5,000 to 793,000 since October 2015, but many may choose to forgo health coverage if they’re forced off MassHealth.

Health Care for All does support Baker’s proposal to create a new class of dental therapists that other groups, including Mass. Senior Action, said could help improve access to cheaper dental care in low-income communities of color.

Sen. Vinny deMacedo, a Plymouth Republican, asked what would happen if the Legislature did not accept the reforms as proposed.

“You’re talking about across the board rate cuts, all providers. It’s the only way,” Sudders said adding that the administration has already been “constraining rates for quite a long time.”

Sen. Barbara L’Italien, an Andover Democrat, said even the ability to offer zero-premium plans through the Connector will not offset the struggle some families will faces to afford higher co-pays for doctor’s visits and other services.

“I think we’re doing this backwards. I think we’re going after poor people,’ L’Italien said.

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Sudders assured L’Italien that non-emergency transportation services for substance abuse and behavioral health treatment, including transport to regular methadone clinic appointments, would be preserved, but gave the senator a clipped answer when she asked whether the administration had thought about people foregoing care to avoid co-pays.

“Of course we’ve thought about those things,” she replied.

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