MA budget woes and a tax increase for some small businesses

Date: January 19, 2017

Rapidly increasing spending in the MA Health/Medicaid program caused a multi-pronged response from the Baker administration, including support for a tax on some small business owners. The Governor’s plan will be included in his FY 2017 budget proposal.    

The state’s budget hole is significant — about $600 million. The principal cause is increased spending on MA Health/Medicaid due to increasing costs and increasing enrollment. But the Baker Obamacare tax — they call it a “fair share” contribution by those business owners enjoying a “windfall” from employees joining MA Health — is $2000 per employee per year on every employer who employs 10 or more full-time workers (35 hours per week) who access the state’s subsidized health care plans. The employer must contribute at least 60% of premium and 80% of the workers in the company must take up the offer of insurance. The Baker plan includes a moratorium on mandates and price controls but the savings will appear later if at all and the tax impact is immediate.   

The expansion of the state’s Medicaid program is a direct result of the state’s deliberate policy choices and is not in any way attributable to business owners. Massachusetts chose to expand Medicaid under Obamacare and to expand eligibility to subsidized plans to those whose families earning up to 400% of poverty level. Massachusetts’ policymakers refused to act to effectively address the costs of health care and health insurance during the last ten years of state and federal health care reform. The Massachusetts legislature continued to make subsidized health care more comprehensive with mandate after mandate while eliminating any lower cost basic plan as a choice for small businesses and their workers. Taxpayers have paid for health care reform through higher state and federal taxes, and wasted hundreds of millions to fix a broken computer system and to fund benefits granted without checking eligibility. Enough is enough. 

Whether Obamacare and expanded MA Health/Medicaid are affordable is debatable, but if Massachusetts chooses to try to preserve the program, the cost should be borne by all the taxpayers, not a small group of business owners whose workers are doing exactly what policymakers incented them to do in choosing to access the generous taxpayer subsidized coverage from the Connector.    

A $2000 tax on some employers is bad policy. It will certainly not solve the underlying problem of increasing health care costs. As MA Health/Medicaid continues to grow, additional state taxes, fees and assessments will be needed.  

NFIB will keep you advised as the details of the proposal are revealed. NFIB will strongly oppose any new health care tax that unfairly or adversely impacts our members. We will not allow small business owners to be punished for bad public policy and uncontrolled health care costs.     

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