NJ 'Health Insurance' Law Shows Democrats' Tax-And-Spend Mindset

 by Chris Jacobs

When Democrats say something is about health care, it often isn’t about health care. That’s the lesson of a law the New Jersey Legislature recently enacted.

Gov. Mikie Sherrill, D-N.J., claimed that the measure “asks any company with 50 or more employees on Medicaid … to cover their workers, which they should do anyway, or pay a fine.” But if she wanted to promote enrollment in private health coverage, she and her colleagues had better avenues to pursue than a blunt tax instrument. Sherrill should call the new measure for what it is: a cash grab to fund an ever-expanding welfare state.

Employer Assessment

The New Jersey measure, a version of which California is reportedly considering, imposes an annual fee (translation: tax) on employers with at least 50 employees receiving health coverage through Medicaid. Employers with 50-249 employees on Medicaid will pay $325 per year for each employee, and each dependent, on Medicaid; employers with 250-499 employees on Medicaid will pay $525 annually for each employee and each dependent; and employers with 500 or more employees on Medicaid will pay $725 per year for each employee and each dependent enrolled in Medicaid.

The bill exempts part-time and seasonal workers, as well as those with intellectual, developmental, and/or physical disabilities from being included in the assessment. The latter exemptions get at a key point that at least one progressive think tank made in opposition to the bill. While the measure ostensibly prohibits employers from using a beneficiary’s Medicaid status “as a basis for denying to the applicant or employee the opportunity to obtain or maintain employment,” such prohibitions may prove difficult to enforce in practice.

A Better Alternative

If Sherrill and the legislature want to keep beneficiaries off the Medicaid rolls — their purported objective in creating this tax — a law dating back to 1990 provides one way to do so. Specifically, Section 1906 of the Social Security Act gives states the authority to require potential Medicaid beneficiaries to obtain their benefits via premium assistance, provided that the alternative form of coverage is cost-effective.

Premium assistance refers to using Medicaid dollars to subsidize private coverage, often health insurance provided by employers. The concept is simple: rather than spending (for instance) $5,000 to fund direct coverage for an individual, Medicaid would instead spend a smaller amount (say, $2,000) subsidizing premiums, deductibles, and co-payments for someone’s employer-based plan.

It isn’t always that simple, of course. Even before Obamacare, only a plurality of low-income workers had an offer of employer-provided health coverage. And in some cases, subsidizing employer coverage may cost more than Medicaid.

Yet premium assistance programs — which would keep people in private coverage rather than on a government-run plan — are obscure, not well-advertised, and hardly used. Data I obtained several years ago from Louisiana indicated that fewer than 1,000 individuals enrolled in that state’s program, at a time when thousands of Louisianans each month were dropping private coverage to go on Medicaid. Louisiana’s sparse take-up likely reflected the fact that the state spent only $11,730 promoting the program over a two-plus year period, meaning that few people knew the program even existed, let alone how to enroll.

Dependence on Government

If Sherrill wanted to encourage better take-up of private health coverage, she could have promoted premium assistance options for low-income residents. She also could make clear that, when individuals have an offer of employer-sponsored coverage that is cost-effective for Medicaid to subsidize, the individual must receive their Medicaid benefits via premium assistance. In other words, New Jerseyans not just shouldn’t drop private coverage to enroll in “free” Medicaid — they won’t be permitted to do so.

Yet the text of the New Jersey bill made its object clear: “the purpose of raising revenue to defray State Medicaid costs.” Rather than promoting private health coverage, lawmakers want to make residents dependent on Medicaid — and force businesses to pay for the ever-growing welfare rolls.

The Wall Street Journal got it right when it noted that “the goal of today’s progressives is to make more people dependent on government, not to help them become self-sufficient.” Mikie Sherrill’s silence on premium assistance — a better way to deliver benefits to low-income individuals — proves it.

https://juniperresearchgroup.substack.com/p/new-jersey-law-shows-democrats-tax