Businesses Urge States To Participate in ACA’s Medicaid Expansion
Many businesses are urging lawmakers in their states to participate in the Medicaid expansion under the Affordable Care Act, noting that failing to do so would shift the cost of insurance coverage from the federal government to employers, theÂ Wall Street Journal reports (Radnofsky,Â Wall Street Journal, 2/10).Â
Under the health reform law, companies with 50 or more full-time workers beginning in 2014 will be required to offer a minimum level of health coverage or pay a penalty, starting at $2,000 per full-time employee after the first 30. If a company offers employee health insurance but the coverage is found to be minimal or unaffordable, the company will be required to pay a penalty of $3,000 for every worker who receives a federal subsidy to purchase health coverage on the individual market.Â
Though most large employers already offer coverage that meets the ACA's minimum standards, certain industries -- such as retail and hotel chains -- are less likely to offer qualifying plans (California Healthline, 11/5/12).Â
Companies could potentially avoid the mandate if their states expand Medicaid, since the federal program would cover low-wage employees at no cost to employers. However, if states decide against Medicaid expansion -- about half of states are opting out of the expansion or still considering whether to participate -- companies will have to provide coverage for their low-wage employees or pay the penalties.
The cost to businesses has factored into some lawmakers' Medicaid expansion decisions.
For example, New Mexico Human Services Secretary Sidonie Squier argued that failing to expand the program would impose a "de facto tax increase" on businesses in her state. Conversely, South Carolina -- which did not expand Medicaid -- argued that employers who already offer coverage to low-income workers would use the expansion as a way to drop coverage and shift costs to the state.
Some observers have said that businesses should not have to shoulder health care costs based on the states' Medicaid decisions.
Katie Mahoney -- executive director of health policy for the U.S. Chamber of Commerce -- noted that the ACA exempts individuals with the lowest incomes in states that do not expand Medicaid from the individual mandate and said that was "a very compelling argument" to allow a similar exemption to the employer mandate.Â
However, others are concerned that businesses will have to cover the additional costs regardless of whether their state participates in the expansion.
Amanda Austin, director of federal public policy for the National Federal of Independent Business, said, "[B]usiness owners are generally concerned from a macro-entitlement perspective that these costs are going to be passed onto businesses indirectly," even if expansion cuts immediate costs (Wall Street Journal, 2/10).ÂThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.