Employers, medical providers worry about impact of cost-cutting moves.
Gov. Charlie Baker’s budget proposal to rein in what he considers runaway MassHealth costs is drawing fire from employers, hospital officials and other health care providers.
As part of his proposed state budget for fiscal 2018, Baker plans to fine employers who do not provide health coverage for their employees and to prohibit the state from doing business with companies that don’t count health insurance among their benefits.
He also proposes to cap reimbursement growth rates for some health care providers and eliminate some MassHealth facility fees charged by hospital systems.
The plan to fine businesses with 11 or more workers $2,000 per employee for not offering health coverage is one of the most contentious parts of Baker’s reform proposal so far.
“The fine is ridiculous,” said Cape restaurateur William Zammer Jr. “Gov. Baker is attempting to balance his budget on the backs of employers.”
Zammer said he offers health coverage to employees, but the cooks and waitstaff usually prefer subsidized plans because those are more affordable than commercial insurance.
But Baker’s administration said the migration of people from commercial coverage to the MassHealth program for low-income individuals was consuming about 40 percent of the state budget.
About 1.9 million people in Massachusetts are on MassHealth, and if growth continues at the current pace MassHealth will generate a $1.1 billion net funding gap by 2020, a report released Jan. 26 by the state Executive Office of Health & Human Services said.
The move from commercial plans to publicly subsidized health coverage occurred under the Romney administration with Massachusetts health reform but really took off with the federal Affordable Care Act.
Federal health reform increased the cap for eligibility for MassHealth — also known as Medicaid — from 100 percent of the federal poverty level to 133 percent in 2014, which is currently $16,000 for a single person, said Suzanne Curry of Health Care for All.
The Affordable Care Act also invalidated a previously existing $295-per-employee fine that the state levied against Massachusetts businesses that did not provide health coverage, said Olive Chase, owner of the Casual Gourmet and chairwoman of the Cape Cod Chamber of Commerce board of directors.
These changes have encouraged the transfer of almost half a million people from commercial employer-sponsored insurance to public plans since 2011, the administration report on Massachusetts insurance market reform says.
It also says MassHealth enrollment has increased 70 percent since 2007, and spending on the subsidized coverage has doubled since then.
The governor’s budget proposals have local business owners worried that the cost of universal coverage will be passed along to them and their employees.
“The price of insurance continues to be a point of pain for the employer and the employee,” said Wendy Northcross, executive director of the Cape Cod Chamber of Commerce.
The Baker administration said it planned to offer a small group plan on the Massachusetts Health Connector with affordable plans, but Northcross said business owners want assurances the care will be adequate. The connector is an independent state agency that helps residents find the right health plan.
Chase said the governor’s goal of having 80 percent of a business’s employees covered by commercial insurance was not realistic.
Some employees choose their spouse’s plans, some are on Medicare and others simply can’t afford the commercial insurance offered by their employer, especially if they are single parents earning $30,000 to $40,000 a year, Chase said.
“They still have to put food on their table and pay their rent,” said Chase, who includes health coverage among her company’s benefits.
Growth in MassHealth enrollment has been especially notable on Cape Cod, where federally qualified nonprofit health clinics have grown by leaps and bounds in recent years.
At Outer Cape Health Services, 21 percent of the center’s 16,800 patients — or 3,528 people — were on MassHealth plans in 2016, said Outer Cape CEO Pat Nadle.
The figures represent an increase of 1,492 patients on MassHealth since 2012, when 12.6 percent of the Outer Cape patient population was on the subsidized plan, Nadle said.
MassHealth provides care to people who haven’t seen a doctor since they were children or who qualify financially after losing a job or an income earner, Nadle said.
Michael Lauf, president and CEO of Cape Cod Healthcare, the parent company of Cape Cod and Falmouth hospitals, said he was concerned attempts to control MassHealth costs would harm the hospitals and patients.
He estimated that the government reimburses only about 84 percent of the cost of patient care, which is significant on the Cape since nearly 80 percent of inpatients at the hospitals are on MassHealth or Medicare.
“We certainly want to take care of our communities,” Lauf said. But he said the hospital system could not afford to lose any more than 15 cents on the insurance dollar.
Massachusetts Hospital Association President and CEO Lynn Nicholas said in a press release Friday that state officials need to work with hospitals on the MassHealth issue so hospitals don’t lose their ability to serve as safety nets for their communities.
“The expansion of the Massachusetts Medicaid program was a collective public policy decision that should be sustained,” Nicholas said.
Talk in Washington about changing or repealing the Affordable Care Act, also referred to as “Obamacare,” also looms over local business owners and health care providers.
Whether MassHealth will continue to be an entitlement program for people who qualify financially or become a block grant or other type of program is in question, health care providers have said.
“You don’t really know how it’s finally going to end,” Nadle said.
— Follow Cynthia McCormick on Twitter: @Cmccormickcct.