A Democratic-sponsored healthcare reform bill overwhelmingly passed the Massachusetts House of Representatives last week, with a lineup of expansions in Medicaid coverage intended to trim the state's uninsured population.
But the legislation relies heavily on an increase in the state's already high cigarette tax. That solution is opposed by Republican Gov. William Weld, who is trying to find support for his tax-credit alternatives and has vowed to veto any bill containing a new tax.
The House vote of 115-42 is nine votes more than the two-thirds majority needed to override a veto in the 159-seat legislative body.
The Massachusetts Hospital Association supports both the Democratic legislation and the Republican amendments because they advance the goal of expanded access to health coverage and consequently would relieve some of the rising uncompensated-care burden on the state's hospitals, said MHA spokeswoman Stacey Simon.
The legislative tussle is over how to implement a federal waiver of standard Medicaid eligibility and coverage guidelines granted last year to pave the way for the state to cover more of its estimated 700,000 uninsured population.
Both sides propose to expand coverage for people with incomes of up to 133% of the federal poverty level. Both proposals also broaden eligibility for health coverage of uninsured children and provide subsidies to the elderly for prescription drugs.
But the Democratic proposal that passed the House imposes a 25-cent increase in the state cigarette tax, for a total tax of 76 cents per pack, and it broadens the tax to include cigars, pipe tobacco and smokeless tobacco.
Weld's amendments, which now move to the Senate, call for a $300 refundable tax credit for senior citizens with incomes up to four times the poverty level to help defray the cost of Medicare supplemental insurance. Those policies provide benefits not covered by Medicare, such as prescription drugs.
Instead of a tax increase, Weld wants to use $200 million of the state's $330 million uncompensated-care pool to offset the tax credits. But he proposed to spread the pool's funding responsibility, now primarily shouldered by hospitals, to expressly include insurance companies doing business in the state, relieving hospitals of a burden about equal to what the healthcare reform proposal would take from the pool.
The assumption is that tax credits would spur businesses to provide insurance for currently uninsured workers and reduce the amount needed in the pool.
But Democrats contend the measure would allow companies already insuring their workers to claim a "bonus" credit, said Brian Rossman, an aide to the Democratic bill's sponsor, state Rep. John McDonough. As a result, the tax credit would drain money from the pool without putting it to use for increased health coverage, Rossman said.
McDonough originally proposed a hedge against that scenario by requiring employers to pay at least 50% of the cost of a basic health benefits plan for employees who work at least 20 hours a week and aren't covered by any other plan (Jan. 22, p. 12).
But that "employer mandate" was dropped from the bill that went to the House floor.