Budget FY 2014, Round 1: House 1
Governor Patrick released his Fiscal Year 2014 budget proposal today, which continues this administration’s strong commitment to ensuring access to affordable, quality health care for everyone in Massachusetts.
Budgets have both a revenue side and a spending side. This budget uses both to improve the health of the Commonwealth and reduce health spending growth.
The targeted revenue includes a long-overdue increase in the tax on cigarettes and other tobacco products, which will reduce the use of tobacco and swiftly bring improved health results. Making our tax system more fair (by simultaneously increasing income taxes, cutting many corporate tax expenditures, reducing the sales tax and increasing the personal exemption) will reduce the tax burden on lowest-income residents, which will directly improve their health.
This revenue supports new spending targeted at restoring vital health benefits, like adult dental benefits for MassHealth members, repairing some of the damage done to our public health system, and beginning the process of implementing the delivery system transformations required to bring down health costs.
Of course, one can’t have the spending without the revenue. As the legislature considers this budget, every revenue increase they scale back or reject will lead to corresponding cuts in services.
And for subsidized health care, this budget is actually two budgets in one, as it straddles two very different health care systems. The fiscal year starts on July 1, but on January 1, the coverage programs of the federal Affordable Care Act (ACA) begin. So the second half of the fiscal year will bring a complete transformation of subsidized coverage programs. Gone will be Commonwealth Care, the Medical Security Program, and the Insurance Partnership. MassHealth expands, and the Connector covers more people than ever. The ACA also brings Massachusetts a healthy infusion of new federal funds that will allow the state to continue to provide the affordability protections for low-income people.
The online budget is in a new format, yet again, and very frustrating to navigate (here’s the utterly impenetrable user guide). It’s so bad that web pages with line item language mysteriously expire if one looks away for too long. In addition to line items, there’s a roll-up organized by function, which, alas, does not include a cross-walk to the line items. The summary for health coverage programs is here. Fortunately, most of the health care initiatives are described in prose, in a clear, detailed budget brief, here. Here are some of our highlights:
- Dental benefits restored: At long last, the Governor’s budget proposes to restore MassHealth dental benefits for all adults, effective January 1, 2014. If adopted, this will end the cruel rationing contained in last year’s partial restoration, which only covered some services for front teeth only. Oral health is directly connected to overall health, and the cost of this benefit will result in savings for MassHealth and the Health Safety Net program.
- ACA Fully Implemented: The budget assumes full implementation of the ACA. MassHealth expands, absorbing 325,000 more members. But the cost of their coverage will be more than made up by increased federal revenue, resulting in a net gain of $156 million. Another 150,000 low-income people will receive state assistance through the Health Connector to supplement federal tax credits, called the “State Wrap.” This supplement is critical to maintain the strong affordability protections in current programs. The brief breaks the news that the state will receive 50/50 federal reimbursement for part of the cost of the wrap, as it does now for existing programs. As a result, this coverage will save the state $50 million compared to current costs. The bottom line is a $205 million fiscal gain for Massachusetts.The budget is not the last word in the legislature on implementing the ACA. Additional legislation will be needed, and we understand the Governor will be filing a bill soon. We will be looking to write into statute the current affordability provisions and other consumer protections to lock in the gains that people depend on.
- Focus on Prevention: The governor’s budget includes some additional funding for a number of public health programs, including more funds for substance abuse treatment, environmental health, health care quality, and community prevention. Funds are also allocated for the administrative costs of the Prevention and Wellness Trust, which will begin its competitive grant process in the coming year. The cigarette and other tobacco products tax increase also falls in this category, though we would strongly urge that those funds do double duty and be earmarked for the Prevention and Wellness Trust.
There’s lots of other important initiatives that we hope will survive the legislative process, including proposals to maintain employer contributions to our health care needs, coupled with an innovative pilot program to provide premium assistance to low-income employees at small businesses; the start of health resource planning; extending MassHealth coverage through the end of the month to prevent gaps in coverage; and a streamlined online eligibility system for all health programs, together with more funds for administrative staff to assist people with their applications.
As long-time budget watchers know, this is just the start of a long process which culminates in late June or early July. The legislature will have a number of critical large decisions to make, about taxes and spending, and thousands of minor decisions which will be critical for the people served as well. The governor’s proposal is a terrific starting point for these decisions. HCFA will be working to bring the voice of people across the Commonwealth who care about our health care system to the coming debate.
UPDATE: The Mass Public Health Association budget analysis is here (pdf). Their topline:
Governor Patrick’s Fiscal Year 2014 budget proposal, released yesterday, includes a significant increase in funding for essential public health infrastructure and regulatory functions. These include inspections of health care facilities, pharmacies, food safety, and air quality – areas which are severely strained and currently pose unacceptable risks to the public. Most other Department of Public Health (DPH) programs – including chronic disease prevention and direct service programs – are level funded. The result is a modest overall increase in DPH funding.