Reforms to the Massachusetts health care system as proposed under a bill recently approved by the state House would provide an overall cost benefit to most of the state's employers, according to a Families USA study released on Wednesday, the Boston Globe reports. The bill, proposed by House Speaker Salvatore DiMasi (D), would levy a 5% payroll tax on companies with 11 to 100 workers and a 7% payroll tax on businesses with 100 or more workers. Companies with 10 or fewer employees would be exempt from the tax. Most businesses that offer health plans to employees would be able to subtract those expenses from the tax and owe nothing. For the study, which was conducted by Families USA and Health Care for All, researchers estimated that expanding insurance coverage, increasing Medicaid payments to hospitals and eliminating employer contributions for uncompensated care would "reduce pressure on" health insurance premium costs by at least $501 million annually. According to estimates by sponsors and the Massachusetts Taxpayer Foundation, the payroll tax would increase costs for businesses from $175 million to $356 million annually. For every one firm that experiences a net loss because of the payroll tax, 18 companies would benefit from the proposal, according to the study. In addition, the study finds that 98,000 firms that already offer health coverage would benefit from the proposal, while 5,400 that do not provide insurance would be required to pay, the Globe reports. The proposal's clearest direct savings to businesses that provide health coverage would be in the elimination of $128 million to $145 million assessed against insurance companies and self-insured employers for the uncompensated care pool, according to the study. In addition, the study's authors predict that employers would save $336 million by 2007 in reductions in uncompensated care spending by hospitals. An increase in Medicaid rates for hospitals also would reduce cost-shifting onto the private insurance market, saving employers $37 million to $42 million, the study finds. Ron Pollack, executive director of Families USA, said, "The net positive impact will be $145 million per year, and possibly even more than double that," adding, "There are a lot of states around the country that want to do something to ameliorate the growing numbers of people who are uninsured. If Massachusetts succeeds, I think many states would consider doing something similar" (Rowland, Boston Globe, 1/18).

The study is available online. Note: You must have Adobe Acrobat Reader to view the study.