Since Massachusetts passed its 2006 law requiring employers to provide easy access to healthcare, some 439,000 people have gained coverage. But a study released Thursday by the Center for Studying Health System Change (HSC) says high costs and expanding expectations may be dampening employer support of the state's near-universal health coverage law.
Employer frustration appears to be growing as the state increases employer responsibilities, the study said. With more employees taking on coverage, costs are up and premiums are rising.
Under Massachusetts' healthcare reform law, employers – except those with fewer than 11 workers – are required to allow workers to purchase insurance with pre-tax dollars. Employers face a $295 annual fee if they do not make a "fair and reasonable" contribution to the cost of workers' coverage.
Under the individual mandate in Massachusetts, uninsured adults who the state has deemed able to afford coverage face a tax penalty. The majority of newly insured residents – 57 percent – obtained either free coverage through the state's Medicaid program (MassHealth) or subsidized coverage through the Commonwealth Care program, according to the state.
Nearly 160,000 Massachusetts residents signed on for employer-sponsored coverage, at a cost of some $540 million annually to employers, the study said.
HSC Senior Fellow Debra A. Draper, co-author of the study, said Massachusetts has expanded coverage, but little has been done to address the long-term viability of the reform.
"Many respondents were concerned that unless the state seriously addresses the underlying factors driving costs that the current trajectory of the reform is financially unsustainable," she said.
The study was based on interviews with 28 stakeholders – including representatives of employer groups, benefits consultants, brokers, health plans, providers, policymakers, advocates and other knowledgeable observers – between May and August.
Respondents to the survey were concerned about the pressures employers will face in the next few years under the new law. Employer costs also are likely to increase because more residents are expected to take up employer coverage to avoid the tax penalty, which will be significantly higher in 2008 at half the annual premium of the lowest-cost health plan available.
Effective Jan. 1, 2009, individuals are required to have prescription drug coverage to meet the individual mandate and avoid the tax penalty. Employers are not required to provide it, but respondents to the survey fear employers will be pressured to provide the drug coverage that meets the requirements. Otherwise, employees will be required to obtain additional coverage or pay the tax penalty because their coverage does not meet the minimum standard.
Also, effective Jan. 1, 2009, the state plans to change the "fair and reasonable" contribution to employees' healthcare costs, requiring employers with more than 50 full-time equivalent employees to meet both thresholds' 33 percent premium contribution and 25 percent employee take-up.
The state is also changing its fair share filing requirements from annual to quarterly, posing undue burden on employers, the survey said.