Massachusetts Governor Proposes $28.2B Budget, Including $400M Increase in Spending for State’s Health Insurance Law

Massachusetts Gov. Deval Patrick (D) on Wednesday introduced a $28.2 billion fiscal year 2009 budget proposal that aims to close a $1.3 billion budget gap primarily created by increasing health care costs and declining state revenue, the Boston Globe reports (Viser, Boston Globe, 1/24). Massachusetts officials expect the state's health care initiative to exceed the original budget for the program by about $245 million this year and another $400 million next year, largely because more people than expected are enrolling in state-subsidized coverage. Under the 2006 law, state residents must obtain health coverage or face a penalty on their state income tax.

Officials initially projected that 140,000 state residents would enroll in the state-subsidized plan, called Commonwealth Care, but enrollment is expected to reach 225,000 by June 2009. As of December 2007, 169,000 people had enrolled in the plan. According to Leslie Kirwan, the state's top budget official, projecting costs for the health insurance law is difficult because the state is "ultimately working with a lot of uncertainty about the number of uninsured that remain out there in the population." The Patrick administration is working to develop a better way to count the uninsured.

The state expects federal funds to cover about half of the higher-than-expected costs for the program, but Massachusetts officials have just begun negotiations with the federal government on the matter. Separately, the state expects $5 million in revenue from businesses that do not offer health coverage for workers, down from the $24 million included in this year's budget (Dembner, Boston Globe, 1/24).

Patrick in the budget also proposed reducing Medicaid spending by $300 million, according to the AP/Boston Herald (AP/Boston Herald, 1/23). The Globe reports that Medicaid enrollment increased by 70,000 beneficiaries since eligibility was expanded under the health insurance law, which -- along with rate increases for providers -- will cause Medicaid spending to outpace the current year's spending (Dembner, Boston Globe, 1/24). In addition, Patrick has proposed increasing the percentage state workers pay for health care to save $51 million (AP/Boston Herald, 1/23).

To close the state's budget gap, Patrick proposed auctioning casino licenses to raise $800 million, changing corporate tax rules to raise $297 million and using $370 million from the state's rainy day fund, among other changes. The plan also includes $500 million in new spending. A final budget is expected by the end of June (Viser, Boston Globe, 1/24).