A fee tied to individual employees’ health coverage will encourage employers to find loopholes and harm workers.
That’s the core problem with Governor Mikie Sherrill’s proposal to charge large employers based on how many of their workers are enrolled in NJ FamilyCare, the state’s Medicaid program. In her first state budget address, Gov. Sherrill proposed collecting fees from employers who have 50 or more workers with Medicaid coverage. The fee would reportedly charge $325 to $725 per employee, depending on the number of employees.
In the wake of deep federal cuts to Medicaid, states — including New Jersey — are scrambling to protect their investments in affordable health care. Those revenue-raising proposals should focus on ensuring that wealthy individuals and corporations pay for health care, while protecting residents enrolled in Medicaid.
Support for Health Care Programs Must Avoid Punishing Covered Workers
While an assessment on employers to pay for employees’ Medicaid coverage might sound like an attractive way to tax big businesses to support health care, the problems with a fee structured as a charge per employee raise serious concerns. A fee designed around individual employees’ coverage in NJ FamilyCare could:
- Discourage employers from hiring workers who have or might enroll in NJ FamilyCare. Workers who need health coverage most would face the greatest barriers to employment. Employers could screen out job applicants they perceive as likely to need Medicaid, creating discrimination against workers from low-income backgrounds.
- Cause workers and their families to hesitate to enroll in NJ FamilyCare, even when they are eligible. Similar to immigrant residents’ fears about public charge rules — rules that can deny visas and green cards based on expected enrollment in certain government programs — this unfairly puts the burden on residents to take unnecessary risks in order to avoid even the potential of punishment.
- Create and worsen stigma around NJ FamilyCare and other state-run health care programs. This could push residents toward employer-based health coverage, despite its drawbacks like its varying quality and inability to transfer with job changes. This concern affects workers in low-wage jobs and temporary positions most.
This fee structure treats workers with NJ FamilyCare as a problem to solve rather than residents seeking quality coverage. It pressures workers to accept potentially lower-quality coverage options through their employer. Workers might also feel stuck, tied to any job they have coverage for, even if they are enduring poor working conditions and are eligible for Medicaid. Ultimately, the fee does nothing to expand coverage options to help the 727,000 uninsured New Jerseyans, nor does it improve the affordability of coverage for workers.
Existing State Tools Can Build Broad-Based Support for NJ FamilyCare
At a time when costs are rising and families across the state are struggling with affordability, state leaders should focus on ensuring corporations and wealthy residents are paying their fair share for public goods. This includes building broader, more sustainable funding support for NJ FamilyCare and expanding coverage options for all residents. Long-term support for residents’ health care would eliminate funding loopholes and make it easier, rather than more difficult, for New Jerseyans to enroll in coverage and remain covered, even when life circumstances change.
New Jersey already has the tools to more sustainably fund NJ FamilyCare in the long term. Using these tools to build a broader base of support for programs would be more efficient and effective in ensuring long-term fiscal stability. In particular, policymakers should increase revenue from the Corporation Business Tax by closing loopholes, eliminate unnecessary tax credits for big businesses, and discourage and punish tax avoidance strategies. These efforts could raise similar amounts of revenue to fund Medicaid and improve the state’s fiscal stability through an uncertain future.
