Tennessee's failure to expand its Medicaid program could cost employers tens of millions of dollars in taxes, according to a study from tax preparation firm Jackson Hewitt.
Without the expansion, large employers in the state would face a little-known provision of the Affordable Care Act. It's called a "shared responsibility" tax, and it was intended to keep big employers from dropping low-income employees from health coverage. Under the shared responsibility tax, companies can be penalized for uninsured employees who qualify for certain tax credits through the federal health care exchange.
Jackson Hewitt Senior VP of Health Policy Brian Haile and a colleague calculated how many people in Tennessee would qualify for those tax credits, arriving at an estimated 24,000. The penalty for that number could range from $48 million to $72 million a year. Haile's previous work in health care includes directing Governor Bill Haslam's Insurance Exchange Planning Initiative from 2010 to 2013.
The Affordable Care Act assumed most, if not all, states would expand their Medicaid programs, making the shared responsibilities tax a low priority. But when the Supreme Court ruled that states were not required to expand Medicaid, the issue rose to the surface. The Jackson Hewitt study estimated the cumulative cost of the tax in the 25 states that don't plan Medicaid expansion could top a billion dollars annually.
The analysis, released Wednesday, reiterated the findings of a 2013 report that predicted higher shared responsibility payments in states that chose not to expand Medicaid programs.
Last week, Governor Haslam told reporters he still wanted the option to expand Medicaid at some point, but chances for expansion are slim at best. The General Assembly's Republican majority opposes the expansion.