Major Health Insurance Reform Underway In Massachusetts
Massachusetts state lawmakers are working on sweeping legislation that could mandate health insurance coverage for all state residents and require all but the smallest employers to provide health benefits or contribute to a pool that would be used to cover the uninsured.
Legislators are weighing three separate proposals that would lead to a restructuring of state laws governing health insurance and provide coverage for the approximately 500,000 Massachusetts residents who currently lack insurance. The basic elements of all the proposals are an expansion of the state’s Medicaid program (MassHealth) to cover a larger group of low-income workers and a requirement that most employers contribute to the cost of insurance. The House and Senate passed two separate versions of the bill in November. Lawmakers are expected to meet in January to reconcile the differences in the bills and consider proposals put forward by Governor Mitt Romney.
The House bill would establish a choice for businesses with more than 10 employees: either provide health benefits to all employees or contribute a portion of business revenue to a newly created "Commonwealth Care Fund." Under the proposal, businesses with 11–100 employees would be required to contribute 5% of payroll each quarter to the fund, while larger businesses would have to contribute 7% of payroll each quarter. Part-time workers would be counted as employees, as would seasonal workers for the quarter in which they worked. Temporary employees or independent contractors would not be counted as employees.
Under the House plan, employers who provide health benefits to workers would receive a credit for their health care expenses, which typically exceed 5% or 7% of payroll. Only the first $94,200 of an employees wages would be used to calculate an employer’s payroll.
The House bill further proposes the establishment of a "Commonwealth Health Insurance Connector," a state-operated agency that would certify and offer health insurance products to companies with 50 or fewer employees. The agency would also provide affordable insurance products to individuals who earn less than 300% of the federal poverty level, but too much to qualify for MassHealth. Businesses employing workers who participate in this program would be required to contribute toward their premiums. More than one employer would be permitted to contribute to an employee’s health coverage, and insurance would be portable for the employee when changing jobs.
The House bill and the governor’s proposal would require individuals to obtain some form of health coverage, but the Senate bill would not. Both the Senate and the House bills call for an expansion of MassHealth to cover more low-income parents, children, and childless adults, while the governor’s plan does not. The Senate proposal does not include mandated contributions by businesses that do not provide insurance, but it would require companies in this group with 50 or more employees to pay the full cost of care if their employees seek health care services from a hospital or community clinic.
Advocates of the reform argue that the 70% of Massachusetts businesses currently providing health benefits to their employees would no longer be made to subsidize, in the form of higher premiums, those companies that do not offer insurance. Some business groups have argued, however, that a new payroll tax could make Massachusetts businesses less competitive, and it could drive some companies from the state.
