Using it to fund Medicaid expansion is a tax hike on small-business owners
State Director Riley Johnson reports from Helena on the small-business agenda for the legislative week ending March 29
House Bill 658 by Rep. Ed Buttrey (R) of Great Falls was the survivor of the two bills reported on last week that would expand Medicaid health insurance to lower-income Montanans. Normally, NFIB would not take a position on many health-care issues. However, this bill contains a provision that assesses a premium tax of 2.75 percent on all of the Montana State Fund’s (MSF) 25,000 workers’ compensation insurance policyholders to partially fund the proposal.
This is not a commentary on the wisdom of Medicaid expansion. But it is a commentary on who should pay for the program.
MSF is a guaranteed market for workers’ compensation insurance; that is that MSF must take any business, regardless of its accident record or the amount of premium it pays. Private workers’ compensation companies can pick and choose whom they write policies for and whom they do not want. MSF insures the vast majority of Montana’s high-risk and low-premium small businesses. Over 75 percent of MSF policyholders pay $5,000 or less in annual premium. These are the businesses that make up the backbone of Montana’s economy. Funding a portion of Medicaid expansion on their backs through a hidden tax is wrong. An increase in MSF expenses through a premium tax of $3 million to $4 million will be passed on to the customers through rates.
The vast majority of NFIB members are part of this sector of Montana’s small businesses, so it is a rate hike to our NFIB members.
MSF is a workers’ compensation insurance company and should have no role in funding a bill related to health care. Doing so results in 25,000 Montana businesses being tax twice for Medicaid expansion – once as private citizens and once as business owners through a tax on their workers’ compensation policy. MSF does not write health insurance.
Presently, like self-insured employers, MSF does not pay a premium tax as the private companies do. This has been long viewed as a trade-off for MSF’s guaranteed market roll. Furthermore, the notion that workers’ compensation premium dollars, paid by Montana employers to protect their injured workers, can be used for purposes other than for which they collected is disturbing. HB 658 comes on the heels of the November 2017 Special Legislative Session where more than $30 million was diverted from MSF policyholder’s equity to the state fire suppression account to pay for fire costs. There is presently a pending lawsuit on that matter, and NFIB is a major party in bringing that lawsuit against the state.
For this reason, NFIB is opposing HB 658, unless this premium tax is amended out of the bill as it goes forward.
Tax Bills Lose
In other action this week, hearings were held on two tax increases on alcohol. Both were defeated in committee. They were SB 339 and HB 650. Two more bills that would have lowered the individual income tax rate slightly and raised certain income tax credits also failed in committees. They were HB 697 and HB 706.
State Budget
The big issue this week has been the state budget. Although the Legislature has not yet adopted a revenue estimate, there are already signs the amount of cash lawmakers have to spend might be less than they predicted at the start of the session. This week the House Tax Committee heard from both its fiscal staff and the governor’s budget office that revenues are looking to come in lower than expected. The legislative estimate is about $37.5 million down, while the governor’s budget office is looking at a possible $60 million lower revenue stream. How lawmakers will resolve this dilemma will likely come next week.
But time is running out. Monday, April 1, is the deadline for moving all money bills from one house to the second house. Lawmakers will be working all day tomorrow and most of Monday to meet this deadline. The deadline for general bills ended March 2.
Stay tuned. It will be another wild week moving into the month of April.
Getting Involved
Getting involved in the 2019 Legislature is easy. The best way to have your voice heard quickly is to phone 406-444-4800. Operators are on hand in the Capitol Building to take messages for up to five legislators on each call, and delivery is within a half hour. For those wanting more information on locating legislators, getting a personal e-mail address, looking to view committee meetings and floor sessions on television or over computers, and just to review all hearings and reading of the actual bills can go to www.leg.mt.gov and access everything electronically.
Previous Reports From the Capitol
