Massachusetts will spend over $40 billion on state services and workers in the upcoming fiscal year under Gov. Charlie Baker’s budget plan, with much of that sum going to pay for healthcare in an uncertain time.
Much of Baker’s policy changes included in the budget alter the state’s health care system just as Congress prepares to dismantle the Affordable Care Act, the national law that affected how we already went about providing near-universal health care coverage in the state. With no guarantee that the replacement national Republicans put in place will come any time soon, or how it will affect Massachusetts, Baker’s plan to reintroduce something like an employer mandate to assure coverage could shore up the system in unsure times.
“If the game changes at the federal level, then obviously we’ll have lots of adjustments that we have to make to deal with that, and we’ll be prepared for that,” Baker said at a press conference Wednesday.
The $40.5 billion plan is the first time spending has crossed the $40 billion mark in a governor’s preferred budget. The increase is based on expected state tax revenue growth, which is pegged this year to go up by around 3.9 percent. With more and more revenue each year, Beacon Hill pays out more and more for services the state provides.
The lion’s share of Baker’s budget plan goes to pay for health care, not only for those covered under state-run health insurance plans, but for the increasing hosts of care for state and municipal employees as well. The state’s Health and Human Services department is responsible for 40 percent of the total spending, a cool $TK billion for the fiscal year starting this summer, including an increase of $140 million over last year for the state’s Medicaid system, an 85 percent increase from last year.
“We stand at a crossroads with respect to the intersection between what we were doing in Massachusetts and the overlay of the Affordable Care Act, and that is what our proposals are designed to address. Federal health care reform disrupted that bipartisan health law that had worked so well here in the Commonwealth,” Baker said.
Democrats hoping to unseat Baker next year claimed the changes to MassHealth will remove some health care benefits for people insured through Obamacare.
“With today’s budget proposal to cut benefits for nearly 300,000 Obamacare beneficiaries, Governor Baker joins the Republican campaign to dismantle Obamacare piece-by-piece,” Massachusetts Democratic Party chairman Gus Bickford wrote in a statement.
While Baker has struggled successfully over the first half of his term to reign in spending growth, MassHealth, the biggest piece of the budget pie, refuses to be contained. The cost of the program has doubled since 2007, caused in no small part by enrollment spiking 70 percent over the same time period.
To keep people covered by private health insurance instead of signing up for government-subsidized coverage, Baker is proposing to force employers to provide health insurance to employees. Facing a fine of $2,000 per workers, companies would be required to expand their healthcare offerings.
“We are seeking to bring back some of the provisions of the original Massachusetts law to ensure that taxpayers don’t have to pay to cover the hundreds of thousands of full time workers who have moved onto taxpayer funded
Masshealth over the course of the past two years,” Baker said.
Baker’s plan also changes the way funds are invested in the state’s “rainy day fund,” which is based on revenue from capital gains taxes. The plan alters when those funds are put into the fund, investing 50 percent of the year’s estimated deposit in at the beginning of the fiscal year and the other half in at the end of it. This, the Baker administration says, will guarantee deposits into the fund when in the past it’s been an inefficient system. Baker’s team anticipates an additional $98 million will be invested this coming fiscal year.
Baker’s number crunchers have found new revenue without technically increasing or creating new taxes by cracking down on enforcement and collection of existing tax obligations. The big one here is by extending taxes to what’s called “transient accommodations,” meaning AirBNB and other online home-sharing operations, to the expected tune of $12 million in revenue.
And gone may be the days of tax-free online sales in Massachusetts, if Baker has his way. Baker also wants to tune up collections on online sales tax by forcing retailers with significant sales in Massachusetts, but don’t have any physical presence here, to collect sales tax from it’s customers. By aggressively working to enforce the existing state’s sales tax laws (instead of creating new ones, you see) Baker hopes to raise another $30 million for the state.
State spending has only grown as revenues increased for the state over time. Spending approved by the governor and Legislature has gone up an average of 4.73 percent since Fiscal Year 2006. It’s gone up every year in that time period with the exception of Fiscal year 2010, when the Great Recession hit the state hard, and spending fell by 4.39 percent.
Baker last year signed off on a mere 1.25 percent increase in spending in the fiscal 2017 budget, but ramped increased spending up to 4.3 percent for this year’s edition.