Key facts
- New Jersey will charge employers a fee for each employee and dependent covered by Medicaid.
- The state expects to raise $145 million annually from this new program.
- Fees range from $325 to $725 per person per year, depending on the number of Medicaid beneficiaries.
- California, Colorado, Oregon, and Connecticut are considering similar measures.
- Business groups argue the fee unfairly penalizes employers for employee decisions.
- Some liberal organizations worry the fee could discourage hiring low-income workers.
New Jersey is implementing a new fee on companies that have employees enrolled in Medicaid, a joint federal and state health insurance program for low-income residents. The measure, signed into law by Governor Mikie Sherrill, is projected to generate $145 million annually for the state. The fee structure varies based on the number of employees utilizing Medicaid, ranging from $325 to $725 per person per year.
This initiative is part of a broader trend among Democratic-led states seeking to offset rising Medicaid costs and potential federal funding shifts. California has passed legislation directing its administration to explore similar employer charges, while Colorado, Oregon, and Connecticut have also seen related proposals. Proponents argue the fees promote fairness, as employers benefit from having a workforce with taxpayer-funded health coverage, especially when compared to smaller businesses that provide insurance.
However, the proposal faces significant opposition from business groups, who argue it unfairly penalizes employers for decisions made by their employees. Some liberal policy organizations also express concerns that such fees could discourage hiring from low-income households, lead to fewer job opportunities, or influence hiring and location decisions. New Jersey's law includes exemptions for temporary and part-time workers and prohibits employment decisions based on Medicaid status to mitigate some of these concerns.
Similar employer-focused Medicaid policies have been attempted in the past. Massachusetts enacted a charge in 2017 that expired after a year, and an earlier Maryland policy targeting Walmart was struck down in federal court. Current proposals aim to avoid legal challenges by not directly referencing employer health plans.