R.I. business groups warn lawmakers: Don’t impose Medicaid tax on employers

March 21-- Mar. 21--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.

"Employers are in a difficult position with this idea," Forry said. "They can't force employees to take the insurance they are giving them, they just get a bill. We have heard about $20,000 bills for a quarter."

The National Federation of Independent Businesses, which has fought employer health-insurance fees in Massachusetts, is doing the same here.

"This has been devastating for Massachusetts. I would not wish this on Rhode Island, and I really hope this policy is opposed," said Christopher Carlozzi, NFIB state director in Rhode Island and Massachusetts at the Tuesday hearing.

There are differences between Massachusetts' Employer Medical Assistance Contribution and what Raimondo is proposing.

Massachusetts charges 5 percent of the wages of each employee getting pubic health insurance while Rhode Island is proposing 10 percent. And Massachusetts' fee is set to expire at the end of this year.

But Massachusetts charges all businesses with six or more employees -- including nonprofit organizations -- where Raimondo is proposing to exempt nonprofits and any company with fewer than 300 workers.

"Our fear ... is if revenue is not met you will slide that 300 [exemption] number down to 100, 25 and eventually impact smaller businesses," Carlozzi said.

The Greater Providence Chamber of Commerce also opposes the Medicaid charge. Chamber lobbyist Elizabeth Suever said on Tuesday that businesses object to having no way of knowing how many of their workers are receiving Medicaid until they receive a bill and can be charged if employees don't take the insurance they offer.

"Not only is it a new tax that would make us an outlier to other states in the country, but an employer can't make someone go on their health-insurance coverage," Suever said. "The employer has no way of knowing that their employee is going onto state Medicaid until they get the bill. There's no way to budget."

The conservative Rhode Island Center for Freedom and Prosperity also opined against the charge Tuesday.

"Businesses should be applauded for hiring low-income workers, not punished," wrote Freedom Center CEO Mike Stenhouse. "Job-producing employers should not be blamed and burdened with this unfair tax to help pay for the bad decision the General Assembly made in 2012 to rapidly expand Medicaid enrollment."

Other opponents: the Rhode Island Business Coalition, representing a swath of industries from restaurants to mortgage bankers to manufacturers, submitted written opposition to the Medicaid charge; the Rhode Island Food Dealers Association (grocers), the Rhode Island Franchisee Association (fast-food chains) and the Rhode Island Partnership for Home Care.

CharterCare Health Partners, which owns Roger Williams Medical Center and Our Lady of Fatima Hospitals, said it would have to pay $450,000 while its nonprofit-hospital competitors in the state would not be charged. CEO Jeffrey Liebman joined the Rhode Island Hospital Association suggesting all hospitals should be made exempt.

The AFL-CIO testified in favor of the Medicaid tax.

In an interview with The Journal Tuesday morning, Raimondo said big employers who benefit from the state's investment in health insurance need to chip in and help pay for it.

"The biggest part of our budget is Medicaid, over $1 billion a year," Raimondo said. "The reality is this is a growing cost and you are getting the benefit of an employee with health insurance. To pay a small piece of our cost, I think, is reasonable."

One area where she said she would be open to compromise is the issue of part-time employees.

The current proposal would charge employers for part-time workers on Medicaid just as it would for full-time workers, but Raimondo said her team had looked at ways to exempt them.

"I thought about how to make this only apply to full-time people, and if someone could help me find a solution I would be open to it," Raimondo said. "The problem is the biggest offenders are Walmart, CVS, the dollar stores and Stop & Shop."

The Raimondo administration estimates that around 150 Rhode Island companies would be charged under the Medicaid tax plan, with the average charge being around $750 per enrolled worker per year.

Earlier this week the state Executive Office of Health and Human Services released a list of employers with more than 50 workers on Medicaid. Last year there were 10 organizations, including nonprofits, with more than 300 workers on Medicaid.

The proposal would not charge employers for workers with disabilities who receive public health insurance. It would allow employers to ask the Department of Human Services to review the Medicaid eligibility of workers.

___

(c)2019 The Providence Journal (Providence, R.I.)

Visit The Providence Journal (Providence, R.I.) at www.projo.com

Distributed by Tribune Content Agency, LLC.