An Act to Address the Financial Stability of the Health Safety Net
Joint Committee on Health Care Financing

On behalf of our member hospitals and health systems, physician organizations, and allied health care providers, the Massachusetts Health & Hospital Association (MHA) appreciates the opportunity to offer comments in strong support of HB1135 which will bring needed financial stability to the Health Safety Net (HSN) program. A strong safety net for uninsured and underinsured Massachusetts residents is essential and the Health Safety Net program is an integral part of protecting these patients. However, the program has, in most years, operated with a funding shortfall and this financial instability threatens the viability of the program.

reinforces the existing statutory requirement of the Unemployment Assistance Trust Fund’s contribution to support the Health Safety Net with at least $30 million annually. Unfortunately, this state transfer from the Commonwealth Care Trust Fund to the Health Safety Net has not been fulfilled in recent years. Chapter 149 of the General Laws was updated in 2013 so that employer medical assistance contributions are now deposited into the Commonwealth Care Trust Fund. As the committee knows, this trust fund supports Connector coverage and the Health Safety Net. As part of that 2013 change, subsection (b) of section 189 of Chapter 149 directs $30 million to be dedicated to the Health Safety Net. Because of this statutory directive and its connection to this health care reform funding, we believe an annual state transfer of $30 million is both appropriate and required.

Even with a $30 million transfer, the Health Safety Net requires further funding to stabilize it, given perpetual annual shortfalls. Currently, hospitals are solely responsible for any funding shortfall -- estimated to be $65 million this year. We also fear that any future changes to low-income health coverage, including any adverse effects of federal immigration policy related to low-income government benefits, will increase hospital uncompensated care. Prior to 2006, uncompensated care funding shortfalls were much larger and demanded state intervention in the form of funding relief to hospitals to help offset the shortfalls. For example, between FY2002 and 2003, the state contributed, on average, $100 million each year to fund uncompensated care. Between FY2004 and FY2006 the state provided more than $200 million, on average, each year through a variety of general fund transfers, supplemental budgets, and other transfers such as funding from the tobacco and medical assistance trust funds.

We believe it is well past time to secure a more balanced funding mechanism. HB1135 will strengthen the financing of the Health Safety Net by dedicating federal revenue generated by Health Safety Net spending to the Health Safety Net Trust Fund. Despite the substantial federal Medicaid matching funds that Health Safety Net-related expenditures generate, all such federal matching funding currently accrues to the state’s General Fund. More than $100 million of Health Safety Net-related federal revenue comes to the state on an annual basis. None of this funding is currently used to support the Health Safety Net program.

will also address fairness to the shortfall allocation. While hospitals and surcharge payers currently pay an equal amount to fund the Health Safety Net through the annual assessment and surcharge payments, hospitals alone are solely responsible for any funding shortfall in the program. However, the cost of providing care to low-income uninsured and underinsured is not limited to a fixed amount of funding from assessments and state transfers. It is based on the number of uninsured in the state, their medical needs, and the program’s payment and eligibility rules as established in law and regulation. The shortfall allocation which falls entirely upon hospitals is simply another financing mechanism of that care. Given the continuous shortfalls and the likelihood they will increase, it is time to address the current unfairness of this funding mechanism by broadening and sharing the cost of that care beyond hospitals -- similar to the shared assessment and surcharge approach. HB1135 seeks to allocate responsibility of any funding shortfall in the program equally among hospitals and surcharge payers.

MHA greatly appreciates the legislature’s strong commitment to the commonwealth’s safety net and we look forward to working with this committee to ensure that low-income patients and the providers that care for them can continue to rely on the Health Safety Net. We appreciate your consideration of these comments and we respectfully request that that the committee report favorably on HB1135.

Thank you for the opportunity to offer testimony on this important matter. If you have any questions, or require further information, please contact Michael Sroczynski, MHA’s Senior Vice President of Government Advocacy, at (781) 262-6055 or msroczynski@mhalink.org