Take the money and Save Employers from Fines
April 16, 2013
By Andy Brack
When South Carolina business owners figure out how they’ll face millions in fines if the state doesn’t take billions in free federal money to provide better health care for hundreds of thousands of low-income workers, they’ll rise up in disgust.
As part of the complicated implementation of the Affordable Care Act to expand access to health care through the federal Medicaid program, South Carolina businesses that employ at least 50 workers could face fines of up to $47 million if Gov. Nikki Haley gets her way and state lawmakers turn down federal expansion dollars.
To put it bluntly, the governor is playing the dangerous political game that business owners won’t figure out they’re liable for fines of up to $3,000 per qualified employee who signs up to get Obamacare through a federal exchange. Why? So she can blame President Obama for “causing the problem” when the bills start rolling into business owners.
This is all avoidable. The federal government will pay for 100 percent of Medicaid expansion efforts through 2016 and for 90 percent from then to 2020 under the Affordable Care Act. That would pump $11 billion into poor South Carolina over seven years, compared with having to pay hundreds of millions of fines over the same time frame.
“We are cutting off our nose in spite of our face because we have a president they don’t like,” said Frank Knapp, head of the S.C. Small Business Chamber of Commerce. “That’s the only reason this is going on. It’s all party politics.”
Knapp highlighted the value of federal Medicaid expansion money: “If we think it’s a good return on investment on this Boeing venture ($120 million in bond money to support a new expansion), it’s a much better investment to expand Medicaid. We’re talking about it creating about 44,000 jobs. Boeing’s not going to create 44,000 jobs.”
The Affordable Care Act envisions low-income workers who don’t have health insurance being able to get coverage for free through Medicaid if they earn 100 percent or less than the federal poverty level. If they earn between 100 percent and 138 percent of poverty, they will qualify for tax credits to help pay for health insurance through Medicaid.
But in states that don’t take federal money to expand Medicaid, an employer with 50 full-time employees who doesn’t currently offer health insurance — like a lot of folks in the tourism industry — will have to pay a $40,000 fine ($2,000 per employee for the number of employees minus 30). If the same employer offers insurance that’s of such low quality that just one employee decides to use a tax credit to get Obamacare through a federal health insurance exchange, the employer could face an annual penalty of $3,000 per employee who takes the credit up to the $40,000 amount calculated earlier.
According to a March study by Jackson Hewitt Tax Service, South Carolina employers could confront fines of $30.4 million to $45.7 million if state lawmakers don’t figure out a way around Haley’s obstinacy.
Proponents for expanding Medicaid say there’s still a chance state senators will include expansion dollars in the state budget. Later this month, busloads of preachers and health care workers are expected to flood the Statehouse to support the measure. Meanwhile, some conservative House members are reportedly looking for an alternative to allow the state to take the money to pay private insurers instead of an exchange for the extra health care.
We’ll see. Time is growing short.
Lots of people might not like how health insurance implementation is playing out. They might feel like a gun is being held to their head to force implementation of Obamacare. But the time for that debate is long past. Now, it’s best for lawmakers to do what’s best for South Carolina and stop fighting old battles (sound familiar?). It’s time for South Carolina to join other industrialized nations and implement broader health care for workers without crippling our hospitals and forcing costs to go up — both of which will happen if we remain bull-headed.
Let’s not be dumb and send the Medicaid expansion dollars we’re supposed to get to California or New York.
Andy Brack is publisher of Statehouse Report. He can be reached at: firstname.lastname@example.org.