Aug 1, 2022 - News

Health care subsidy expansion plan gets new life

Illustration of a stethoscope made from a coin.
Illustration: Shoshana Gordon/Axios

Massachusetts Democrats might have saved a plan to use part of the state's overwhelming budget surplus to expand health care subsidies for middle-class residents, despite Republican Gov. Charlie Baker’s efforts to kill the proposal.

What’s happening: Baker blocked an expansion of ConnectorCare, which subsidizes health care costs, in an amendment to the state's $52.7 billion budget.

  • Baker says he wants to further study the program before expanding it.
  • Lawmakers rejected Baker’s amendment and resurrected the expansion, which would take effect in June 2023.

Why it matters: Massachusetts residents see costs rising on every corner, from the gas pump to grocery stores to utility bills.

  • Advocates say the program would offer lower premiums and deductibles, as well as other subsidies to families who are struggling but make slightly too much to get health care assistance under the current rules.

Details: The program would change eligibility to cover a person making up to $68,000 a year or a family of four making $139,000 a year — an estimated 37,000 Massachusetts residents.

  • ConnectorCare members are more likely to seek health care if their costs are subsidized, according to a 2021 Massachusetts Health Connector report.
  • Gorman Associates, which was contracted by the advocacy group Health Care For All to provide a cost analysis, projects the expansion would cost $75 million a year.

Context: Massachusetts has billions to spend from surplus tax revenue, enhanced federal Medicaid reimbursements and aid from the American Rescue Plan Act.

  • So much tax revenue was collected in the fiscal year 2022 that it triggered a 1980s law requiring the state to return a percentage of the extra funds to taxpayers, with those making more money getting more tax relief.

The other side: Baker said in his letter to lawmakers rejecting the program that he’d prefer a study, and that he believes the state should focus on enrolling people who are currently eligible but haven’t signed up.

Meanwhile, the Baker administration told legislative leaders it plans to remove $225 million from ConnectorCare's fund to close the books on fiscal 2022.

  • That’s roughly three times the projected annual cost of the expansion.
  • The ConnectorCare fund had more money left over than what was needed for this fiscal year’s caseload, per the administration.

In the weeds: Advocates say the state can afford the program without surplus tax revenues or ARPA aid.

  • Massachusetts spent some $222.5 million on 193,000 ConnectorCare enrollees in fiscal 2019 — the latest year accounted for in state financial reports. (As of this July, ConnectorCare has 141,000 enrollees.)
  • During the pandemic, the state has received more money from the feds to cover health care costs for low earners. The state expected to save at least $81 million a year in enhanced Medicaid reimbursements since ARPA took effect in 2021.

What's next: The ball is in Baker's court. He could go along with Democrats' expansion or reject it.

  • If he rejects it, lawmakers will likely wait until the next legislative session — when Massachusetts has a new governor — to try again.
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