The bill will also require states to redetermine enrollees’ eligibility for MassHealth twice a year instead of annually.
To satisfy that requirement, the state should also work on establishing automated systems that let information be verified through data-matching, so the state uses information it collects through other state agencies (like unemployment insurance filings) to confirm eligibility for MassHealth. The good news is state officials told the Globe they are already making plans to address these administrative hurdles.
While the goal should be keeping people insured, some residents will lose insurance for paperwork reasons, or because they can no longer afford it, or because they lose eligibility. For example, many immigrants who have legal status in the US but not permanent residency (like refugees or asylum seekers) will no longer be eligible for Medicaid or for subsidies from Massachusetts’ Health Connector.
It’s also still unknown whether Congress will extend a set of tax credits passed in 2020 that lowered premiums for many people purchasing subsidized insurance. If the credits expire, Health Connector premiums for many enrollees would spike next year, likely making them unaffordable for some people.
Of course, people without insurance will still get sick, and they are likely to land in hospital emergency rooms.
Massachusetts’ Health Safety Net fund, which helps hospitals pay for uncompensated care, is already running a shortfall. Legislators need to start talking about whether the current formula for funding the Health Safety Net is adequate and what changes, if any, should be made so that a few hospitals don’t bear a disproportionate share of the cost for providing this care.
The financial hits to Medicaid will come from several policy changes included in the bill. The biggest ones are restrictions on the extent to which the state can rely on provider taxes and state-directed payments, which are complicated methods by which the state uses state money (including fees collected from hospitals and providers) to draw federal Medicaid matching money, then distributes that money back to health care providers (hospitals, nursing homes, and community health centers).
There are no easy answers as the Legislature and governor decide how to respond.
Lawmakers will likely face pressure to raise new revenues through taxes or dip into the state’s $8.1 billion rainy day fund to avoid major cuts to MassHealth benefits or eligibility. But the magnitude of the cuts will make it impossible for the state to backfill the entire amount.
At the same time, ripples from the Medicaid cuts will affect the entire health care system. The organization Third Way estimates Massachusetts hospitals will lose $424 million annually due to Medicaid cuts. That could force some hospitals to stop providing less lucrative services, like obstetrical care or psychiatric treatment. If Medicaid reimbursement declines, providers could turn to commercial insurance to recoup costs, leading to higher premiums for people with employer-based plans.
There will likely be targeted areas where the state will want to replace federal with state money — for example, if money is need to avoid the shuttering of essential services, like a rural hospital’s emergency room or the sole regional facility for labor and delivery. There may need to be cuts to MassHealth benefits, and enrollees will be forced to pay new federally required copays for many services. Some rates paid to providers may be cut.
Massachusetts also needs to negotiate a new waiver with federal Medicaid officials by the end of 2027, which sets the parameters around how MassHealth is structured and what services the federal government will cover. Massachusetts Congressman Jake Auchincloss suggested, in an interview with the editorial board, that the state could seek to negotiate more state flexibility and autonomy in running its own program — for example, to make enrollment easier, to experiment with pilot programs, do more with alternative payment systems, or get paid for investments that save Medicare money, like community-based care for seniors.
During the COVID-19 pandemic, the state convened state policy experts and stakeholders to respond to the crisis. The Healey administration should consider reviving that model today.
In a time of scarcity, it’s tempting for each segment of the industry to protect its turf. It would be far better to put state policy makers in a room with representatives of hospitals, community health centers, insurers, nursing homes, drug companies, patient advocates, and other health system stakeholders so they can collaborate and chart a path forward that’s in the best interest of the Commonwealth’s residents.
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