employer penalties


Did Employer Penalties Work In Massachusetts?

By Martha Bebinger

Think back, way back, to the last days of winter, 2006: it looked like negotiations around a landmark health care law in Massachusetts might fall apart.

The sticking point was whether to include a health insurance mandate for employers and if not, how to make sure they helped cover the uninsured. The deal that broke the logjam was largely symbolic, although lawmakers didn’t say that at the time. Now, it’s clear to many that the penalties have had little effect on achieving near universal coverage.

First, a quick refresher:

The state’s health coverage law included two largely symbolic penalties for employers who didn’t get with the program by providing adequate employee health insurance.

1) The Free Rider Penalty
It’s supposed to catch employers whose workers use more than $50,000 worth of “free care” in one year. (These are costs covered by what used to be called the “free care pool,” and what is now the “health safety net.” Essentially, it’s patient care that hospitals don’t expect to be paid for, so they bill the state.) For instance, if an uninsured worker who has a serious accident or illness, gets care in a hospital, and doesn’t pay the bill, the law says the state can fine that worker’s employer between 20% and 80% of the care. A report out last week says no one has paid the fine since the law took effect. Initial estimates suggested it might raise $50 million. In the final bill, this penalty was waived for employers who let workers buy health insurance on a pre-tax basis. No one expected the Free Rider penalty to raise much money and it hasn’t: $0 to be clear. Continue reading