Another Reckless Shackle on Businesses’ Backs

By capitulating to progressive-union pressure, and despite disingenuous claims that no broad-based taxes were imposed, Ocean Staters will once again bear increased burdens to pay for new taxes and regulations, more spending, and more union giveaways. Lawmakers chose to appease, rather than resist, the progressives’ job-killing, big-spending agenda.

On Monday, I pointed out that Rhode Island’s elected leaders should at least be concerned about the possibility that progressive impositions on Rhode Island businesses — like the paid-time-off mandate — might be hurting our jobs and employment market.  Well, now there’s this:

Rhode Island business groups are asking state lawmakers not to emulate Massachusetts’ tax on companies whose workers receive public health insurance, saying it has had “devastating” and “nightmarish” economic consequences there.

Grocers, home-care providers, restaurant chains and some hospitals are among the business interests fighting the plan in Gov. Gina Raimondo’s budget to charge companies with at least 300 employees a 10-percent fee on the wages of Medicaid-enrolled workers. The budget expects to collect $15.6 million next year and $19.5 million each year after that from the charge.

“Some of our members in Massachusetts are hearing horror stories,” Lenette Forry, lobbying for the Northern Rhode Island Chamber of Commerce and Rhode Island Hospital Association, told Rhode Island lawmakers Tuesday night.

Raimondo’s contrary argument is not persuasive.  She says that the state’s provision of Medicaid helps the businesses, so they should pick up some of the tab.  More than anything, this is an indication of the rolling consequences of bad policy.

Progressive officials pushed the policies making taxpayers liable for the health care of able-bodied people with lower incomes.  Progressive officials spent all kinds of money on an online health insurance system that shuffles people automatically into free-to-them Medicaid, even when they were willing to pay for individual plans.  Progressive officials spent and millions advertising and drawing people toward it.   Progressive officials overestimated how many paying customers they’d have and underestimated how many people would be added to Medicaid.  So now progressive officials are looking for a villain whom they can stick with the bill.

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The thing is, businesses exist to make money for the people who own and operate them.  The more expense government layers on the balance sheet, the harder it is to accomplish that goal.  When it stops making sense to run the business, or at least to run it in Rhode Island, businesses will just stop doing it.

That’s where we’re going, and it’s going to be a disaster.

  • Joe Smith

    Justin – who is forcing these “profit maximizing” business owners to hire or retain Medicaid employees? The expansion may have been bad policy, but let’s not hide the fact it also was a form or “corporate welfare” that we all love to rail against.

    I also don’t think Progressives “underestimated” Medicaid expansion – it’s chipping away to single payer/universal health care – get more people on the system, then come back to businesses to say “look at what you are now saving by not having to pay health care premiums so you can cough up some of that back to the government”.

    • Justin Katz

      I find your first paragraph to be a strange argument. Businesses provide health care to the extent that helps them to hire and retain employees. If the government chooses to force taxpayers to fund health insurance, that isn’t welfare to the businesses. In a competitive market, the businesses’ demand for employees remains the same, as should the supply of workers, so the price to hire should shift to salary or some other benefit rather than health care.

      • Joe Smith

        No, to the extent healthcare coverage is either required or embedded as a general expectation of employment, the supply curve for “medicaid” eligible workers increases, making them less expensive, ceteris paribus.

        Why else would you have Forbes write:

        “Recent changes to healthcare laws have placed a greater financial burden on businesses. But tucked into the law is a new government program that can save companies thousands of dollars per year. This new program is expanded and improved Medicaid, designed to help low-income employees and their employers.

        Your company can take advantage of this program by helping low-income employees enroll in Medicaid, thereby keeping your business’s healthcare costs down”

        For certain publicly provided goods, you can argue a positive externality (basic education or law enforcement / judicial system (property rights, contract enforcement) accrues to society (and businesses) so society as a whole should share in the costs (although the final burdens depend on the tax/fee system).

        Healthcare is not a public good; it may have some positive externalities but one could argue that publicly providing healthcare to workers benefits more the company (obviously in addition to the worker) from having a steady labor input than to society as a whole. My argument is the company for sure benefits more than I’m guessing the positive external benefits to society – hence it’s not unreasonable to ask the company to share in that cost.

        As I mentioned, I think the expansion to start was bad policy – the logical conclusion from Forbes’ thinking is simply government provided universal health care..