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.
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The governor shelved his earlier plan to impose a $2,000-per-worker charge on businesses that do not provide adequate health care benefits, after that idea was met with resistance from several major business organizations.
Many of those same business leaders endorsed Baker's revised EMAC fee after it was coupled with proposed changes designed to trim about $150 from MassHealth, which costs $16 billion annually and consumes some 40 percent of the entire state budget.
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.
The Democratic-controlled Legislature approved the $200 million assessment, along with a pared down increase in unemployment insurance rates for businesses, as part of the state's $40 billion budget for the July 1 first fiscal year. But lawmakers balked at including the Medicaid changes, arguing they did not have enough time to fully vet the proposals.
Some Democrats, including gubernatorial candidates Jay Gonzalez and Setti Warren, contended 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 initially declined to approve the EMAC assessment without the other changes he proposed and demanded that lawmakers return the full package -- or something comparable -- to his desk within 60 days. But House and Senate leaders, after holding a public hearing, agreed only to tackle the broader Medicaid issues later in the session.
By now agreeing to sign the EMAC fee on Wednesday, Baker avoids a more protracted showdown with the Legislature and a potential veto override. While acknowledging the risk that lawmakers might take an entirely different approach -- or not act at all -- he pointed to public statements from Democratic leaders acknowledging the need to rein in escalating 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," the governor said.