Baker plays budget man in the middle

It’s become a well-known part of the current dynamic on Beacon Hill: Though Democrats enjoy super-majorities in both legislative branches, the House leans right and often forms a tag-team with Republican Gov. Charlie Baker that isolates the more liberal Senate.

With the 2018 budget plan put out yesterday, however, House leaders don’t just lean right, they move right past Baker and have the governor looking like a wild-eyed tax-and-spender.

The most controversial issue in the budget debate is likely to be an effort by the Baker administration to rein in Medicaid costs — now gobbling up 40 percent of the state budget — by levying an assessment on employers whose health care plans don’t meet a set of requirements. The administration says too many people with workplace-based insurance are moving onto the Medicaid rolls, a trend that is crowding out the state’s ability to meet other spending needs. The administration’s assessment on employers would generate an estimated $300 million a year. The administration is also looking to slow overall health care costs by limiting insurance reimbursement increases at the state’s most expensive hospitals.

The tax on employers has drawn fierce opposition from the business community, opening up an unusual rift between its leaders and the generally business-friendly governor. The House plan pulls back on the employer levy — and also nixes the hospital price limits — but there are differing takes on just how much of a retreat the proposal represents.

The Globe says the House budget “significantly tempered two controversial proposals” by Baker. The House would maintain a fee on employers, but wants it to apply more narrowly and estimates such a scheme would generate $180 million, nearly half the administration estimate. “It’s clearly a step in the right direction,” Jim Rooney, head of the Greater Boston Chamber of Commerce, tells the Globe.

The Herald paints the picture differently. “Miffed business leaders say that House leaders have essentially kept alive Gov. Charlie Baker’s proposal to hit companies with a health insurance tax as part of their $40.3 billion budget proposal, which calls for more dialogue — but no concrete alternatives — to the controversial plan,” writes Matt Stout.

The House essentially seems to tell Baker it’s OK to levy an employer assessment of some kind, but let’s have it bring in only $180 million, not $300 million, and you figure out the details.

“We obviously can’t continue to go down this path,” Speaker Robert DeLeo said of soaring Medicaid costs, but he and his underlings have punted on specifics of an alternative, more sustainable path to follow.

“We’re cautiously optimistic that a constructive dialogue will continue between the administration and the business community that will yield a better outcome,” said House Ways and Means Chairman Brian Dempsey. That’s Beacon Hill talk for, we have a ways to go before this thing is settled.  

Jon Hurst, of the Retailers Association of Massachusetts, makes clear how the business community views the problem. “We firmly believe health care costs in this state are out of control,” Hurst tells the Herald. But offering the sort of Republican budget-talking-point one expects from Baker, he added, we have to “question whether this is really a revenue problem or an expenditure problem.”

That would seem to be encouraging cuts in Medicaid services and spending — which is obviously easier for Hurst to suggest than Baker.

Between the employer assessment — which the governor says is open to negotiation — and the proposal to limit reimbursement rate increases for the highest-cost hospitals, Baker’s moves seem more drawn from the Democratic playbook than the free-market thinking he is usually associated with. (The talk of capping prices is a far cry from the days in the early 1990s when Baker was part of the Weld administration effort to unwind hospital price-setting as part of the deregulation of health care.)  

When it comes to the big health care questions, at least, Baker seems to be landing between the Democratic House and Senate, a feat that more than earns him the moniker of moderate Republican — and is probably not unrelated to the sky-high approval rating he continues to record.



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