The House budget committee on Monday unanimously advanced a $40.3 billion spending blueprint for next year that would greenlight the Baker administration's plan to levy an assessment on employers to help pay for MassHealth, but only after a public hearing process aimed at giving the business an opportunity to air their concerns.
The budget bill approved by the Ways and Means Committee would also increase local aid slightly above levels proposed by Gov. Charlie Baker in January, and make targeted new investments in early education, developmental services and affordable housing.
The budget calls for spending growth of 3.8 percent, or about $180 million shy of the level the Republican governor proposed in his budget released in January. The difference, according to officials, is associated with the use of lower projections for MassHealth enrollment, which reduced its reliance on a new MassHealth revenue source from about $300 million to $180 million.
House Ways and Means Chairman Brian Dempsey said that close to 68 percent of the more than $1 billion in revenue growth assumed for fiscal 2018 would be consumed by increased spending on MassHealth, pensions and local aid.
The House budget does not call for any increases in broad-based taxes but makes some changes in other tax laws. The plan is predicated on growth in state tax revenues accelerating from its sluggish pace in recent years.
Under the House bill, Baker would be free to pursue a new, controverial assessment on employers that don't provide health coverage to a significant number of their workers, which has been identified as a driver in higher Medicaid enrollment expenses.
Dempsey, a Haverhill Democrat, said that the House budget would defer to the administration, authorizing the Department of Revenue to implement an employer assessment after a public hearing process. House leadership also supports Baker's stated desire to seek a federal waiver to return to the rules under the 2006 health reform law that required workers to accept employer-sponsored health coverage when it was offered.
While Baker initially proposed a $2,000 assessment on many employers that don't cover at least 80 percent of their workers, the House plan does not take a position on the most controversial aspects of the plan - the size of the assessment or who it should apply to.
"I think we want to take a macro approach to how we proceed with health care going forward," Dempsey said, referencing the work done by a special commission led by Rep. Jeffrey Sanchez that explored options to control health care spending. "So to embrace any policies without, I think, a comprehensive plan at this point is maybe premature, particularly with the uncertainty in Washington."
Dempsey said House leadership would like the administration to consider some of factors raised over the past two months by the business community over how an assessment would be applied, including use of MassHealth by specific companies, access to insurance through a spouse, and employer size.
"My sense is that everyone wants to get to a better place on this, including the admininstration," Dempsey said.
Since proposing the assessment, the Baker administration has been considering alternative plans to generate new revenue to pay for MassHealth enrollment growth that it attributes to the roughly 379,000 people with full- or part-time jobs that are choosing to get health coverage through Medicaid instead of their employer.
One of those ideas is to double something known as the Employer Medical Assistance Contribution from $51 per employee to $102 to generate $320 million in total revenue. The EMAC increase would be smaller than the assessment, but apply to a broader swath of employers.
"We could not see consensus among the business community to embrace that," Dempsey said, adding that if the administration decided pursue an alternative to the employer assessment it would need to seek legislative approval.
The House budget plan rejects Baker's call for caps on Group Insurance Commission and commercial provider rates, as well as the elimination of facility fees or a moratorium on new mandated benefits for five years.
House Speaker Robert DeLeo called the House plan a "fiscally responsible" document that would boost the "rainy day fund" by $100 million to $1.4 billion, and reduce the state's reliance on one-time revenues to balance the budget to $110 million, only slightly more than the $95 million in Baker's budget.
"I believe the double A plus bond rating that we've been able to earn will be preserved by this budget," DeLeo said.
After cities and towns expressed worry that Baker's budget would provide for one of the smallest increases in local aid in recent memory, the House budget would provide the same $40 million increase in unrestricted local aid and boost Chapter 70 spending for local schools to more than $4.7 billion, a $106 million increase and $15 million more than Baker proposed.
Rep. Todd Smola, the ranking Republican on the Ways and Means Committee, said the plan will need a "stem to stern review," but added, "I think there's some really good stuff in it."
On authorizing Baker to deploy an employer assessment to cover MassHealth expenses, Smola said, "At the end of the day the administration is asking for this for a very good reason. We see MassHealth costs have gone out of control. We're seeing double digit increases over previous years. So there are big challenges there and that's a tough thing to try to manage from one year to the next so giving the administration that flexbility will enable them to react as time goes on throughout the year instead of us doing it from one fiscal budget to the next."
The budget delivers on DeLeo's promise to support early education with a $15 million salary reserve and a $2.5 million investment in early education mental health consultation grants that doubles this year's funding in the hopes identifying learning challenges earlier in life.
Higher education campuses would receive a modest $10.3 million increase in state support, half of which would go to the University of Massachusetts.
DeLeo said he is recommending adoption of the governor's proposed tax credit for business that hire veterans.
The budget, the speaker said, also rejects all changes to the way income is calculated for transitional assistance proposed by Baker and allocates an additional $15 million toward rental vouchers that will impact an estimated 234 to 343 additional families.
Dempsey credited the Legislature's commitment to rental vouchers and short-term rental assitance to the decline in the number of families housed by the state in hotels and motels, which has been a talking point for the governor.
The House leaders also said the 5 percent increase for developmental services nearly rivaled the growth in spending on local aid with $60 million in additional funding put into outside vendor services and $16.7 million more for the "Turning 22" program to help 967 individuals aging out of state supports.
Asked where he cut back on spending from Baker's proposal to offset the increases in local aid and other priorities, Dempsey said caseload-driven accounts such as budgets for the sheriffs and indigent counsel services were funded a levels lower than Baker recommended.
Both areas routinely require supplemental spending during the middle of the fiscal year. "That's a fine point. We'll have to see," Dempsey said.
The House usually uses floor amendments to further pad spending accounts. Budget deliberations are scheduled to begin on Monday, April 24. Amendments to the bill are due by 5 p.m. on Thursday, April 13.