Rhode Island Gov. Gina Raimondo has proposed taxing large businesses that don’t provide health insurance to employees. The Public’s Radio political analyst Scott MacKay says it’s about time these companies paid their fair share.
For years, Rhode Island allowed many wealthy corporations –most of them national firms—to slough off some of their employee health care costs on the taxpayers. Finally, the Raimondo Administration has come up with a plan to recover some of that money.
Under a new budget provision, the governor is proposing to join Massachusetts in forcing employers whose workers get their health care from the taxpayers under the Medicaid program to chip in and help with the costs.
A new report shows that thousands of working Rhode Islanders are eligible for Medicaid. Raimondo plans to target for-profit companies that employ low-wage workers without insuring them. This new tax is projected to bring in about $16 million in state money to help with the soaring costs of state-financed health insurance.
There have been the predictable howls from some elements of the business community. Christopher Carlozzi, state director for the National Federation of Independent Business, says a similar measure in Massachusetts has created “great hardship” for businesses.
And Mike Stenhouse of the Rhode Island Center for Freedom and Prosperity says that companies that produce jobs shouldn’t be blamed for the “bad decision” of the General Assembly, which in 2012 expanded Medicaid coverage to grant health insurance to more low-income workers.
Yet, facts are stubborn things. What they show is that Raimondo has been fair to small business by exempting any company with fewer than 300 workers. That is far more generous to business than a similar Massachusetts law that gives a pass only to companies with fewer than 6 employees. These large employers would contribute an average of $750 per worker who relies on Medicaid –about the same as Massachusetts.
The state estimates the new tax would harvest about $16 million in new revenue, which is far less than the $44 million in annual state costs for these Medicaid benefits.
According to the state’s report, the companies affected are far from the mom and pop corner store. Among the companies that would be affected are the fast-food industry, pharmacy giant CVS, Electric Boat, the huge defense contractor, Dollar Tree Stores, Home Depot and WalMart.
Let’s not shed any tears for these employers. They have all been given billions in federal tax cuts. Rhode Island state government has also made life more profitable for these firms by cutting utility taxes in recent years. Moreover, some of these big companies benefit from state tax subsidies that they receive for hiring new employees.
Since 2008, data from state programs show that Rhode Island has handed out nearly $350 million in tax breaks to companies. You have to wonder whether these are good investments or just more corporate welfare?
For many years Rhode Island did a poor job assessing these tax breaks. Politicians love those news conferences where they preen for the cameras and praise each other for creating jobs. But they don’t much like to talk about the costs.
Until this year, successive governors have ignored a state law that requires state Human Service Agency officials to compile date on which companies employ low-wage workers who receive Medicaid. After prodding from State Sen. Lou DiPalma, a Middletown Democrat, the Raimondo Administration finally complied with the law.
It’s too easy to demonize low-wage workers with taxpayer financed health care as freeloaders. There have been national proposals to drug-test food stamp and Medicaid recipients. Yet no serious lawmaker has advanced plans to drug test bankers who took federal bailouts or corporate farmers raking in federal crop support payments. Or seriously trying to ferret out the waste in billion dollar defense contracts.
The business community has a legitimate beef – that the state does very little to try to control health care costs. One of the promises of the Obamacare Medicaid expansion is that it would grant almost everyone health insurance. Then, with nearly universal care, the government would design a health regime that would focus on preventive care and keep people from flooding hospital emergency rooms.
That hasn’t happened. Employers should cover low-wage workers health care. If they don’t it’s only fair to ask them to contribute instead of fleecing taxpayers. It’s also past time for the politicians to come up with meaningful ways to deal with spiraling health care costs that threaten economic progress.
Scott MacKay’s commentary can be heard every Monday morning at 6:45 and 8:45 and at 5:44 in the afternoon.
