The logjam in the health reform conference committee was broken in March 2006, when representatives of the business and provider community reached an agreement with the legislative leadership on what became the the Fair Share Assessment and the Free Rider Surcharge. These two assessments were integral to the funding the legislature counted on to sustain the health reform program. The financing projections (first reported in our blog, here) took into account the estimated revenue from these assessments, and the expectations of revenue from the business community was set and made public.
This was the revenue expectations from these two sources for the first three years of health reform, and the actual revenue likely to be collected under current regulations:
Fair Share Assessment Revenue
Expected 2007: $45 million
Actual 2007: $0 million
Expected 2008: $36 million
Actual 2008: $5 million so far, maybe $8 million eventually
Expected 2009: $22.5 million
Actual 2009: $10 million at most
Expected 2007-2009: $103 million
Actual 2007-2009: at most $18 million
Free Rider Assessment Revenue
Expected 2007: $50 million
Actual 2007: $0 million
Expected 2008: $40 million
Actual 2008: $0 million
Expected 2009: $25 million
Actual 2009: $0 million
Expected 2007-2009: $115 million
Actual 2007-2009: nothing
Total expected revenue from employers over 3 years: $218.5 million
Actual revenue received from employers over 3 years: $18 million
Health reform’s foundation is shared responsibility. Is it fair to make legislative and administrative changes that bring the business community share up to the amount expected by all parties at the time of the bill’s passage?
Part-timers should not be covered to the level as full-time employees. If part-timers are going to mandated coverage thru an employer based system, then the % of coverage should be adjusted based upon the number of hours they work per week. If they work 20 hours, the employee would drop his % of contribution by 50%.
My prediction, if the state tries to push this through or increases the fine per employee, then the state will have an ERISA fight. Now the state knows that it won’t win that battle, so they won’t even present that.
This whole system was based upon getting the employer community to sign off on it. Now that it is beginning to crumble from a funding point of view, the state would risk losing all employer support.
That’s actually not true. You should check with Mass Taxpayers Foundation as I believe they provided the initial estimate to the legislature. It has become folklore that this is what happened but actually an analyst at MTF used old MEPS data that was not broken down into the categories of data that we had available at DHCFP. The estimates were not based on any definition of “fair and reasonable” since there was no detail about what that might mean at the time. It’s true that some legislators were not happy with the fair share regulations that were ultimately promulgated but this had nothing to do with the initial revenue estimates. I’d be happy to provide greater detail but a blog entry is not the place for excel tables!
Thanks Amy for your comment. The revenue estimates were done by the legislature, in the context of the c.58 Conference Report. It reflects what the legislature expected to be funded by employer contributions. As a result, we think it’s reasonable to adjust policies so that actual revenue comes close to what was expected.
One reason “Fair Share” revenue is so much lower than expected is that the standard adopted by the Romney administration was much weaker than that intended by the legislature. Both Senator Moore and Representative Walrath, the co-chairs of the legislative conference committee, have written that they expected the standard to require employers to cover at least half of the cost of coverage, and include part-timers. The standard adopted only requires employers to cover a third of premiums, and part-timers are excluded altogether.
In part because the legislative intent was not followed in the regulations, the revenue is far below the expected level.
Brian Rosman
it’s also Emanuel…..
that’s Fuchs.
These were never projections made by any administration official using real data. The initial Fair Share Calculation used incorrect data and was a “back of the envelope” calculation which was later corrected and if my memory serves me was more on the order of 21 million. I never saw a calculation for the free rider assessment but I’m guessing most employers are now offering the S125 plans so are not subjected to that “penalty.” Although “Shared Responsibility” has a nice ring to it, I would direct your readers to the recent JAMA article by Emanual and Fucks (Marh 8, 2008)”Who Really Pays for Health Care? The Myth of Shared Responsibility.”
Don’t forget providers and health plans. Providers have gotten hundreds of millions of dollars and health plans have thousands of new members. They haven’t shared much responsibility yet either–and it’s about time they did.