GOP Governors Refusing To Expand Medicaid Could Cost Their States’ Employers More Than $1 Billion

The Republican governors who are refusing to accept Obamacare’s optional expansion of the Medicaid program typically cite financial concerns; despite all evidence to the contrary, GOP leaders claim that accepting federal funds to extend health coverage to additional low-income American will end up being too costly for their states. According to a new study, however, they have it backwards. Continuing to resist health reform could be significantly financially riskier than simply agreeing to expand Medicaid.

Each governor resisting Medicaid expansion could end up costing the employers in their state over $1 billion dollars, a new Jackson Hewitt Tax Service report finds. That’s because, since the health reform law seeks to ensure that everyone has access to insurance, Obamacare holds businesses with more than 50 employees responsible for making sure their workers have adequate benefits. Employers won’t be penalized for failing to offer health care to their low-wage workers if those employees can access public insurance through Medicaid — but if states don’t expand their Medicaid pools, the workers who have no other way to get health care could end up costing their employers:

A clause in the 2010 health-care overhaul penalizes some employers when their workers aren’t able to obtain affordable medical coverage through the company. Employers can avoid those fees if their workers qualify for Medicaid as part of an expansion that as many as 22 states have rejected, according to a report today by Jackson Hewitt Tax Service Inc.

Without Medicaid, a “shared responsibility” payment of as much as $3,000 may be triggered for each employee who can’t get insurance through their company. In Texas, the largest state to refuse to increase Medicaid, employers may be liable for as much as $448 million in fines, the study found. In Florida, where the legislature has refused an expansion supported by Governor Rick Scott, employers may pay as much as $219 million. […]

Of course, this won’t come as welcome news to many of the companies that have so far gotten away with denying their workers health benefits. Employers are decrying Obamacare’s “shared responsibility” provision for potentially raising their costs, threatening to slash their workers’ hours, freeze hiring and lay off staff, or raise the prices for their products.


But the health law is simply trying to work within an employer-based insurance system that hasn’t historically been able to ensure that poor Americans can access the benefits they need. If low-wage workers can’t qualify for public insurance programs because their governors won’t expand Medicaid’s eligibility levels, then they will need to be able to get health care from their employers. And if their bosses won’t provide it, they’ll have to turn to the subsidized insurance on Obamacare’s health exchanges — triggering the employer fine.

Even aside from Medicaid expansion’s potential to help alleviate the “shared responsibility” fee, several reports have projected that the states choosing to expand their Medicaid programs will actually save money by doing so. The financial benefits are largely thanks to the increased federal funding that will free up states’ funds for other purposes, but also because of the reduced strain of providing fewer health services for the uninsured once more people are covered.