Governor Seeks to Punish Employers Via Proposed Medicaid Tax

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Businesses should be applauded for hiring those most in need of work…not punished with more taxes, and certainly not made out to be the bad guy. It is misguided to think that if employees are not covered by their employer’s insurance plan, full or part time, and instead are enrolled in Medicaid, then the business should be punished. Progressives in the Raimondo Administration are once again seeking to punish employers for not operating their private businesses the way this government wants them to. Governor Raimondo’s proposed “Medicaid Employer Assessment” is a new tax designed to force private sector businesses to pay for the state’s costly decision to expand Medicaid earlier this decade.
As our Center correctly warned in 2012 – when the Rhode Island General Assembly went decided to expand Medicaid under the provisions of the federal Affordable Care Act (ACA) – despite the high federal match, that Medicaid costs for Rhode Island would skyrocket, at least an additional $50 million per year. Now seven years later, the attempt to try to pin part of the blame and burden on businesses who hire low-income workers for this legislative decision, is unconscionable.
However, as Gary Sasse points out on twitter our state needs a strong business voice that will oppose new spending.
Under this proposed new tax in Rhode Island, employers would receive a bill from the government, up to $1500 for each employee who chose to opt-in to the government’s own push to increase enrollment in Medicaid. The Governor’s misguided theory is that if employees are not covered by their employer’s insurance plan, full or part time, and instead have chosen to enroll in Medicaid, then the business should be punished.
Unfortunately, in many such instances, it is out of the employer’s control.
Such oppressive legislation may actually end up working against some of those it is intended to help. As with the pending pay equity legislation, I have personally been told my many employers that they may simply avoid the potential costs and legal risks by hiring fewer women, minorities, or low-income workers. Rhode Island should be a place where people can achieve their hopes and dreams, not a place where we punish employers. Things do not have to be this way in the Ocean State, but it is up to all of us to change them.


  • ShannonEntropy

    The best way to eliminate the “unfairness” of this new tax is to exempt part-time employees. I can see where some low-pay workers might deliberately keep their hours / pay under income limits to qualify for “free” Medicaid. Why then should their employers pay a penalty ??

    Address this issue, Gina, and all the employer resistance to your proposal might well melt away

    • Joe Smith

      Great point.

      Of course, employers normally respond to incentives. Forbes had a whole article on “how to game” the Medicaid expansion by hiring Medicaid eligible employees and then “CYA” methods to show the employees “preferred” Medicaid or “opted out” of the employer plan.

      Endless cycle – government keeps making rules to cover all the ways people respond to the rules made prior.

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