State governors who say expanding the Medicaid program as spelled out in the Affordable Care Act is bad for business, may in fact be hurting business owners more by refusing to expand the insurance program for the poor.
Those are the findings of a recent analysis from Parsippany, N.J.-based Jackson Hewitt Tax Service Inc., which analyzed a portion of the ACA that would requires employers to pay a fine – referred to as a "shared responsibility" payment – of as much as $3,000 per employee that is not able to find affordable insurance coverage through their employer.
"A lot of businesses have taken the position that they oppose a Medicaid expansion because it would increase their taxes," said Brian Haile, senior vice president for health policy at Jackson Hewitt said in a Bloomberg News report. "The irony of this, or the paradox, is that the opposite may be true, at least for some businesses in some states."
According to the Jackson Hewitt analysis, as many as 22 states have either declared they won't expand Medicaid or are leaning toward saying no to the proposed expansion under ACA, which would include all those earning less than 138 percent of the federal poverty level (currently about $32,500 per year for a family of four).
Since the law assumed people earning less than 138 percent of FPL would be enrolled in Medicaid programs, it also limited the availability of the premium assistance tax credits to people earing between 100 percent and 400 percent of FPL. But employees who fall in this earning range may have no other affordable insurance options other than opting to buy their health insurance on the health insurance exchanges, instead of through their employer.
For employers with more than 50 full-time equivalent employees, this would casue the "shared responsibility" clause to kick in, costing them as much as $3,000 per employee who seeks more affordable coverage outside the company's existing health plan.
The potential costs to employers in those states that don't expand Medicaid and thus have lower income employees who would qualify for Medicaid seeking insurance on the exchanges is significant.
According to the Jackson Hewitt analysis, employers in the 22 states would be saddled with between $872 million to $1.3 billion in annual "shared responsibility" payments. In Texas alone, in the absence of a Medicaid expansion, employers there would be on the hook for between $299 million to $448 million in annual payments under this provision.
In Florida, where Gov. Rick Scott's plan to expand Medicaid was recently shot down in a state senate committee, that price tag to employers for not expanding the program would range between $145 million and $218 million each year.
"These estimates suggest that employer liabilities for the shared responsibility payments may be substantial. Such costs could exceed $1 billion across those states that are now facing the decision about whether to expand Medicaid or that have thus far declined to do so," the report concluded. "Any projections of the "net" costs of Medicaid expansions should reflect the very real costs of such liabilities to employers in any particular state.