MILWAUKEE (AP) - Gov. Scott Walker's decision not to expand the state's Medicaid coverage could cost large Wisconsin employers about $37 million in tax penalties, according to a national analysis released Wednesday.
Starting next year, employers with at least 50 full-time workers will face a tax penalty if their workers get subsidized coverage through the federal online exchanges. But companies won't face a penalty if those workers get subsidized coverage through Medicaid instead.
About half the states have expanded their Medicaid coverage or are considering doing so. In those cases, businesses wouldn't face tax penalties because their employees would be covered by Medicaid. But in states like Wisconsin, which declined to expand Medicaid, the tax penalties will apply.
A report by Jackson Hewitt Tax Service Inc. estimated that of 31,000 uninsured Wisconsin adults working full-time who are between 100 percent and 138 percent of the federal poverty level, about 12,000 work for large employers who'll be hit by the tax penalty.
The amount of the penalty is determined by a formula that takes into account a company's total number of full-time employees. It works out to a penalty of about $2,000 to $3,000 per affected worker, for a total cost in Wisconsin of $25 million to $37 million, said Brian Haile, a vice president at Jackson Hewitt who conducted the analysis.
"The only way for the state to remove that liability is to extend Medicaid eligibility to 138 percent," he said. He added that Jackson Hewitt wasn't taking a position on whether a state should expand Medicaid but was simply calculating numbers to provide for an informed analysis.
Walker, a Republican, rejected federal money to expand Medicaid up to the 138 percent level. Instead, he and the Republican-led Legislature lowered Medicaid eligibility for parents and caretaker relatives from 200 percent to 100 percent of poverty, reducing the number of people on the program, while also expanding Medicaid to childless adults below poverty.
J.P. Wieske, a spokesman for the insurance commissioner's office, questioned the validity of the numbers in the report, saying they started with national estimates and then relied on a series of simplifying assumptions that introduced a percentage error at every step.
"It's kind of a generic guesstimate," he said. "It's assumption after assumption off of national numbers. It's not a Wisconsin-based number."
Walker's office has said the governor's plan ensures everyone living in poverty will be covered under Medicaid for the first time in Wisconsin history, while those above the poverty level will have access to the federal marketplace.
U.S. Sen. Tammy Baldwin, a Madison Democrat, has repeatedly criticized Walker for not setting up a state-run exchange and refusing federal funds to expand Medicaid in the state. Her spokesman, John Kraus, said the latest report shows that Wisconsin is paying a price for Walker's decisions.
"This report makes clear that the path Governor Walker has taken will increase costs for Wisconsin businesses at a time when we need them investing in economic growth and creating jobs for people looking for work in our struggling economy," he said in an email.
The federal poverty level is $11,490 for an individual, $15,510 for a couple and $23,550 for a family of four.
Starting next year, employers with at least 50 full-time workers will face a tax penalty if their workers get subsidized coverage through the federal online exchanges. But companies won't face a penalty if those workers get subsidized coverage through Medicaid instead.
About half the states have expanded their Medicaid coverage or are considering doing so. In those cases, businesses wouldn't face tax penalties because their employees would be covered by Medicaid. But in states like Wisconsin, which declined to expand Medicaid, the tax penalties will apply.
A report by Jackson Hewitt Tax Service Inc. estimated that of 31,000 uninsured Wisconsin adults working full-time who are between 100 percent and 138 percent of the federal poverty level, about 12,000 work for large employers who'll be hit by the tax penalty.
The amount of the penalty is determined by a formula that takes into account a company's total number of full-time employees. It works out to a penalty of about $2,000 to $3,000 per affected worker, for a total cost in Wisconsin of $25 million to $37 million, said Brian Haile, a vice president at Jackson Hewitt who conducted the analysis.
"The only way for the state to remove that liability is to extend Medicaid eligibility to 138 percent," he said. He added that Jackson Hewitt wasn't taking a position on whether a state should expand Medicaid but was simply calculating numbers to provide for an informed analysis.
Walker, a Republican, rejected federal money to expand Medicaid up to the 138 percent level. Instead, he and the Republican-led Legislature lowered Medicaid eligibility for parents and caretaker relatives from 200 percent to 100 percent of poverty, reducing the number of people on the program, while also expanding Medicaid to childless adults below poverty.
J.P. Wieske, a spokesman for the insurance commissioner's office, questioned the validity of the numbers in the report, saying they started with national estimates and then relied on a series of simplifying assumptions that introduced a percentage error at every step.
"It's kind of a generic guesstimate," he said. "It's assumption after assumption off of national numbers. It's not a Wisconsin-based number."
Walker's office has said the governor's plan ensures everyone living in poverty will be covered under Medicaid for the first time in Wisconsin history, while those above the poverty level will have access to the federal marketplace.
U.S. Sen. Tammy Baldwin, a Madison Democrat, has repeatedly criticized Walker for not setting up a state-run exchange and refusing federal funds to expand Medicaid in the state. Her spokesman, John Kraus, said the latest report shows that Wisconsin is paying a price for Walker's decisions.
"This report makes clear that the path Governor Walker has taken will increase costs for Wisconsin businesses at a time when we need them investing in economic growth and creating jobs for people looking for work in our struggling economy," he said in an email.
The federal poverty level is $11,490 for an individual, $15,510 for a couple and $23,550 for a family of four.