Tax Payers face Burden of Massachusetts Health Insurance Mandate

As the eyes of the nation have been focused on Massachusetts’s health insurance mandate, and other states have moved to emulate their program; the specter of “Tax-a-Chuesetts” has reared its ugly head. As the State’s first full fiscal year with the new law providing affordable health insurance to all residents comes to a close in June, State officials are distressed to report that most businesses have not paid the penalties required by the new law, and they are not expected to.

According to a story reported in the Boston Globe, the millions of dollars that the state expected to collect in the programs first year from businesses that do not comply with the mandate to provide affordable medical benefits to their employees, has not been realized. And while officials claim this was not totally unexpected, and plan to cover the shortfall by “shifting funds from other programs”, others fear that the load will actually be shifted to the taxpayers.

As many current proposals for a national universal health insurance plan have been looking at the Massachusetts program as a model, advocates of such mandated programs find this news a bit disconcerting. Under the Massachusetts Law, businesses with 11 or more employees who do not make a “fair and reasonable” effort to provide affordable health benefits for those employees would be charged an annual fee of about 300.00. The fees were supposed to then go into a fund to help provide state subsidized low cost healthcare plans for those who cannot afford to comply with the mandated health insurance coverage.

Such penalties are at the root of other mandated health insurance plans that are currently in effect and proposed in other States. The penalties in Massachusetts were expected to bring in 95 million this year, and 76 Million next. Instead officials in Massachusetts are saying they may not see any revenue from penalties this year and maybe only 24 million next. This year cost saving initiatives will be able to offset the drop in expected revenue. But next year it is expected that if the situation does not change, a burden of some 125 million dollars could revert to the tax payers to keep the program solvent.

A spokesperson for a Massachusetts based business watchdog group – The Massachusetts Taxpayers Foundation, said that businesses will eventually pay the required fees, but because of the many loopholes and exemptions that can be found, the amounts collected will be much smaller then anticipated.