Wisconsin employers could pay additional taxes of up to $36.1 million because of Gov. Scott Walker’s decision to not go through with the Medicaid expansion, according to a new report.
An analysis from Jackson Hewitt, a tax service company, called the taxes a “hidden surprise for employers.” The Milwaukee Journal Sentinel first reported on the analysis, which found, in Wisconsin, employers of more than 50 employees who offer health care could pay between $24.1 million and $36.1 million in penalties.
Walker decided last month to decline the Medicaid expansion for people up to 133 percent of the poverty level. Instead, he chose another plan that would cover slightly less people. Walker’s plan would set the eligibility level for Medicaid at 100 percent, moving everyone above that amount to private insurance.
Part of Walker’s reasoning is that he was unsure whether the federal government could keep the funding promises, which would leave more costs to the state. The federal government would pay 100 percent of the expansion until 2016, when it would then gradually decrease to its permanent level of 90 percent.
But the report warns against only taking the state budget into consideration and encourages lawmakers to also look at costs like employer taxes.
“Any projections of the ‘net’ costs of Medicaid expansions should reflect the very real costs of such liabilities to employers in any particular state,” the report said.
People who employ of 50 people or more who offer health care could face taxes of up to $3,000 per employee for each employee who goes to the partly subsidized insurance exchanges, which are online marketplaces for uninsured individuals and businesses to get insurance. There would be a cap of about $2,000 multiplied by the total number of employees at the company, however.
In Wisconsin, the report noted, about 12,000 of these employees would be eligible for the exchanges. Those exchanges are supposed to be up in 2014, and the federal government gives subsidies on a sliding scale to people on them.
Walker’s office did not respond to a request for comment on this issue, but in an email to The Milwaukee Journal Sentinel, his spokesperson Jocelyn Webster said Walker’s plan encourages independence from government help.
“Governor Walker is focused on moving people from government dependence into the independence of making their own health care decisions,” Webster said. “Governor Walker’s plan allows adults not living in poverty to access affordable health care through the private market.”
Community Advocates, a Milwaukee group that supports the expansion, has talked to Walker’s office about this issue before but has received no response, according to Mike Bare, the group’s research coordinator.
Bare said the group has talked to some Republican legislators who are concerned about it, but he said “it’s up to them” whether it would make them vote against Walker’s plan when it comes to the Legislature later this year.
Wisconsin Council on Children and Families Research Director Jon Peacock said Walker has taken a “narrow” view on the Medicaid expansion. He said the number of people on the exchanges may actually be higher, making these employer taxes go up more.
“The state’s decision about whether to close the gap in BadgerCare needs to be based on an analysis of all costs, including this one,” Peacock said.