The Garden State has become the first state to penalize companies for employing Medicaid beneficiaries. Under legislation signed June 30 by Gov. Mikie Sherrill, D-N.J., companies with at least 50 employees will pay an annual fee between $325 and $725 for every worker or dependent of a worker enrolled in Medicaid.
California lawmakers have approved legislation that directs the state to come up with options for New Jersey-style taxes on employers. Democrats in Washington and Connecticut have also considered similar proposals.
Supporters argue that profitable employers shouldn’t shift the cost of covering their workers onto taxpayers.
It’s an intuitively appealing argument. But taxes change behavior. A tax on employing Medicaid recipients is, in effect, a tax on hiring low-income workers.
