Massachusetts Increases Spending For Health Insurance Law

Massachusetts Gov. DevalPatrick (D) on Wednesday introduced a $28.2 billion fiscal year 2009 budgetproposal that aims to close a $1.3 billion budget gap primarily created byincreasing health care costs and declining state revenue, the Boston Globe reports (Viser, Boston Globe, 1/24). Massachusetts officialsexpect the state's health care initiative to exceed the original budget for theprogram by about $245 million this year and another $400 million next year,largely because more people than expected are enrolling in state-subsidizedcoverage. Under the 2006 law, state residents must obtain health coverage orface a penalty on their state income tax.

Officials initially projected that 140,000 state residents would enroll in thestate-subsidized plan, called Commonwealth Care, but enrollment is expected to reach 225,000by June 2009. As of December 2007, 169,000 people had enrolled in the plan.According to Leslie Kirwan, the state's top budget official, projecting costsfor the health insurance law is difficult because the state is "ultimatelyworking with a lot of uncertainty about the number of uninsured that remain outthere in the population." The Patrick administration is working to developa better way to count the uninsured.

The state expects federal funds to cover about half of the higher-than-expectedcosts for the program, but Massachusettsofficials have just begun negotiations with the federal government on thematter. Separately, the state expects $5 million in revenue from businessesthat do not offer health coverage for workers, down from the $24 millionincluded in this year's budget (Dembner, BostonGlobe,1/24).

Patrick in the budget also proposed reducing Medicaid spending by $300 million,according to the AP/Boston Herald (AP/Boston Herald,1/23). The Globe reports that Medicaid enrollment increased by70,000 beneficiaries since eligibility was expanded under the health insurancelaw, which -- along with rate increases for providers -- will cause Medicaidspending to outpace the current year's spending (Dembner, Boston Globe,1/24). In addition, Patrick has proposed increasing the percentage stateworkers pay for health care to save $51 million (AP/Boston Herald,1/23).

To close the state's budget gap, Patrick proposed auctioning casino licenses toraise $800 million, changing corporate tax rules to raise $297 million andusing $370 million from the state's rainy day fund, among other changes. Theplan also includes $500 million in new spending. A final budget is expected bythe end of June (Viser, Boston Globe, 1/24).

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