Penny and Pound Foolish: Governor Baker’s MassHealth Savings Plan

After running on a campaign of new and smart ways to reduce government spending, Massachusetts Governor Charlie Baker (R) has proposed budget cuts for fiscal year 2016 that are neither new nor smart — going after the low-hanging fruit of government funded Medicaid (MassHealth) for the Commonwealth’s poorest, sickest and most vulnerable residents. Most of the proposed savings to MassHealth in Gov. Baker’s plan are merely a matter of bookkeeping – shifting costs from fiscal year 2016 to fiscal 2017. But the Administration also aims to reduce spending by requiring over one million residents enrolled in MassHealth to prove that they are still eligible. Though the Administration has not provided an estimate of how many ineligible people are enrolled, Baker’s budget team estimates that this move will save the Commonwealth $210 million.

The immediate plan is for the Commonwealth to contact 1.2 million people who were automatically re-enrolled in MassHealth when the Health Connector (‘Exchange’) website experienced technical failures in 2013. Each of these people will receive two letters asking them to reconfirm their eligibility. After 60 days those who do not respond will lose coverage. That may not sound unreasonable, but as a sociologist who works with low income women, I suspect this plan presents disproportionate hardships for residents who do not have permanent addresses or who struggle with understanding government forms and with gathering the required documentation; that is, the people who most need consistent healthcare coverage. Individuals who lose eligibility will be allowed to re-certify in the future, but the immediate effect will be disrupted care and an uptick in expensive emergency department usage.

The scanty information released by Governor Baker’s office indicates three categories of potentially ineligible people who would be eliminated from the MassHealth rolls. The most straightforward are people who still are on MassHealth plans but have moved out of state and receive coverage elsewhere. These people, however, would not seem to account for much spending given that they have other insurance where they actually live so are unlikely to use MassHealth benefits. The second category is people who have had a change in income sufficient to place them over the eligibility threshold. Given the absence of a meaningful economic recovery for low wage workers in Massachusetts, this category likely consists of individuals and families whose current earnings push them marginally over the eligibility line. Switching these people from MassHealth to the heavily subsidized insurance policies that they are eligible for through the Health Connector is unlikely to make much of a difference in the budget.

A third category – people who are purposely cheating or “working the system” — has not been explicitly singled out in statements from the Governor’s office. But given 2010 gubernatorial candidate Charlie Baker’s fake electronic benefit cards that said: “Deval Patrick’s Massachusetts EBT Welfare Card. Swipe me for booze, cash, cigarettes, and/or lottery tickets at taxpayers’ expense,” weeding out Medicaid cheaters certainly lurks behind the call for re-certification. Again, we have no information regarding numbers, but we do know that hunts for fraudulent welfare claims consistently turn up very little cheating and thus very little cost-saving. Last year, for example, Maine Gov. Paul LePage (R) released data intending to prove widespread welfare abuse but in fact showed that 99% of all welfare benefit transactions were legitimate and legal.

The re-certification process in and of itself will be costly. If we calculate (modestly) 15 minutes for a government worker to process a straightforward re-certification, the 1.2 million re-certifications will take approximately 300,000 hours. And if we assume (modestly) a salary of $15 / hour for the workers who process re-certifications, the bureaucratic cost will come to 4.5 million dollars – a substantial chunk of what the Administration is looking to cut from the MassHealth budget and money that surely could be spent in a manner more conducive to protecting the health of Massachusetts’ residents.

These numbers are just an estimate, and I assume the Governor’s staff has more accurate numbers. But even if I’m off by 50%, we’re still looking at a cost cutting plan that is likely to cost the Commonwealth a great deal both in terms of salaries and in terms of health.

For more on the larger picture of  health care coverage click:  Health Insurance Roulette: The House Always Wins

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