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Massachusetts
To Help Small Business Pay For Health Insurance
Bay State program will subsidize health costs for low income workers
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Business New Haven
2/8/1999
By: Mitchell Young
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While some in Connecticut may worry that Nutmeg State taxpayers will be paying the salary of Patriots quarterback and Massachusetts resident Drew Bledsoe, government officials across the border in Massachusetts have just unveiled a plan to help small businesses pay for health insurance for their lower-income workers.
Assistance will be available to companies with fewer than 50 employees that pay at least 50 percent of the cost of health-care premiums. Employers will receive annual payments up to $400 per qualifying employee and $1,000 per family covered. Employee income limits will change annually, but effective March 31, qualifying income for an individual would be $16,104 and $32,904 for a family of four.
In addition to the payments to employers, Massachusetts will also help low-income workers pay their share of health-care expenses. The workers' share would be $30 per month for a family plan, with the state picking up the rest of the employee contribution.
For example, if the cost of family coverage was $600 per month, with the employer paying 60 percent ($360) per month, Massachusetts will pay $1,000 annually, or $83 per month. The employee contribution would be $240, but the cost to the employee will be just $30, with the state picking up the $210 remainder.
Qualifying Connecticut companies which employ Massachusetts residents who meet the income guidelines for the program may also be eligible for assistance. For further information, companies can call the Massachusetts Division of Medical Assistance (DMA) at 617-210-5000.
Jerimiah Cole, the Massachusetts DMA's director of planning and development, explains the scope and reasoning behind the plan dubbed the “Insurance Partnership.” “Based on the number of people who would qualify and the size of employers, we're assuming 150,000 people will directly benefit from this program,” he says.
Cole describes the roots of the initiative: “We analyzed the problem of uninsurance and realized it was a series of different problems. We determined two main problems: people that had just a bit more income to be eligible for Medicaid; but an equal part was the working uninsured, which is the large majority of the uninsured. That group breaks out into two problems: people offered insurance who don't feel they can or can't afford insurance and those that aren't offered insurance by their employers.”
According to the results of a survey by the Connecticut Office of Health Care Access released last April, “A significant percentage of working adults - 8.3 percent - lacked insurance coverage. Moreover, 60.7 percent of adults who were uninsured at the time of the survey were employed.”
Cole explains the national trend toward more working uninsured. “Even after the recession has ended in most parts of the country, the rate of unisurance has continued to go up. The biggest reason is that employers' share wasn't going up with the cost, so more employees have decided to go without insurance.”
Connecticut's survey provides detail on the uninsured and demonstrates that younger, potentially healthier, workers are first to opt out. “Nearly 50 percent of the state's uninsured workers were employed by companies that offered health insurance,” it observed. “The majority of those uninsured workers were between 19 and 34.” Almost 50 percent of the state's insured residents who paid for at least part of their health insurance paid less than $44 per month.
Massachusetts and other states considering subsidizing low-income workers are concerned that their programs not crowd out private insurance paid for by employers.
Says Cole: “The trick [in providing help to small companies] is in doing it in a cost-effective way. You don't want to replace private insurance with state insurance; that's too often the route reformers have taken. We're getting a family insured [in the above example] for $303 a month; if we paid directly we would pay the full $600. With this program we provide insurance at a lower lost, making sure people have mainstream insurance and we're keeping the employer involved.”
About 500,000 people are currently uninsured in Massachusetts, down from 750,000, before reform efforts began. The new program is expected to bring the total uninsured to about 400,000 people, most of whom, according to Cole, can afford health insurance and have chosen not to obtain it.
In Connecticut slightly more than seven percent of the state's residents were unisured at the time of the survey.
Cole estimates that at full enrollment (150,000) the payments to employers will be approximately $34 million and the payments for low income employees will cost $124 million. Funding for the Massachusetts program comes from a variety of sources, including existing state programs, funds from the state's uncompensated care pool and some federal money from the reform and an increase in cigarette taxes, which provide a small part of the potential costs. Here in Connecticut the debate continues over the use of tobacco settlement revenues.
On January 29, Lt. Gov. Jodi Rell issued a report calling for programs to eliminate youth smoking and for the creation of an “endowment fund” for health programs.
Gov. John G. Rowland recently appointed Rell to lead a working group to make recommendations on the use of Connecticut's share of the multi-state tobacco settlement. Connecticut is expected to receive between $3.6 billion and $5.3 billion, with inflation adjustments over a 25-year period. Rell's report asks for 30 percent of the tobacco settlement to be used to “strengthen and enhance the welfare of Connecticut citizens, including a study of the feasibility of providing health care coverage for uninisured adults under Title XXI.”
– by Mitchell Young
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