Democratic lawmakers and governors see it as a way to help pay for the joint federal and state insurance program that covers low-income residents as federal policy changes are expected to make the program more expensive for states and may lead to a reduction in the number of people with coverage.
Proponents also say it's about fairness because employers benefit from having some lower-income workers with taxpayer-funded health coverage.
Business groups object. So do some liberal policy organizations.
New Jersey Gov. Mikie Sherrill signed a measure Tuesday night to charge employers that have at least 50 workers covered by Medicaid, and the state budget she approved earlier in the week counts on raising $145 million this year from the program.
Under the plan, companies will be billed for each employee and employees' dependent receiving Medicaid, the joint state-federal insurance program.
The fees per person would start at $325 a year for companies with 50 to 249 Medicaid beneficiaries and top out at $725 annually for employers with at least 500 recipients.
A bill passed this week in California doesn't impose a charge now, but it does direct the state administration to present lawmakers options for doing so next year.
State Sen. John Laird, a Democrat who sponsored the California proposal, said the big tax and policy law President Trump signed a year ago was a major factor in the need for action because it could prompt the state to spend more on Medicaid to plug holes left by federal changes.
The nonpartisan Congressional Budget Office expects more than 10 million people will be uninsured because of the law by 2034. It requires some beneficiaries to work,be in school or volunteer — and requires even more to document whether they meet the requirements. Most employees at the bigger companies would not be at risk of losing Medicaid coverage as long as they're working at least 20 hours a week.
It's no surprise that business organizations have criticized the approach, which would add to their expenses.
“The fact remains that many job-creators are still going to be penalized for something they have no control over,” Christopher Emigholz, the chief government affairs officer at the New Jersey Business and Industry Association, said in a statement. “If an employee declines an employer-provided health plan because they’d rather be on Medicaid, it is unfair to penalize the employer for that employee’s decision.”
Some left-leaning policy organizations also oppose the charges.
Gideon Lukens, who analyzes health policy at the left-leaning Center on Budget and Policy Priorities, said that while the idea may be well-intentioned, it could lead companies to employ fewer people from low-income household or single parents. He said companies could also consider the policy in decisions about whom to hire or lay off — and also on where to locate or how many workers to employ.
And, he said, it could make employees — or potential employees — less likely to enroll in Medicaid knowing it would make them less attractive to employers.
