Murphy, saying N.J. could net $30M, proposes to fine firms of 50-plus workers that don’t offer health insurance (at $150 per employee)

Companies with more than 50 employees, seeking to curb health care costs, increasingly have been found to be shifting the burden of coverage to the state government in recent years by forcing their employees to gain coverage through the Medicaid expansion.

In fact, the state’s Department of Human Services, based on 2017 data, found that a quarter of enrollees, or about 451,000 individuals, are corporate workers and their dependents.

Gov. Phil Murphy, in his budget address Tuesday, said he wants to close this loophole.

Murphy announced a proposal that would penalize companies with 50 or more employees a $150 fee per employee — and there are about 200,000 such employees in the state.

The proposed Corporate Responsibility Fee, he said, would net the state about $30 million for FY 2020 — money Murphy said will help fund Medicaid in the state.

“We will do more to alleviate the costs pushed onto our Medicaid system by large employers who leave workers to rely on Medicaid, instead of offering a health care plan,” he said. “This budget will ask employers with 50 or more employees on Medicaid to pay a small Corporate Responsibility Fee of $150 for each one of these employees.

“They should share in the burden of paying for their employees’ care, rather than leaving it to the rest of us.”

Murphy said the proposal is one of many geared toward reducing the cost of health care for the state.

“In total, our budget contains roughly $800 million in real and lasting savings in the delivery of public employee health care in the coming fiscal year — a 16 percent year-over-year decrease from the current budget,” he said.

Whether the proposals will be signed into law — and have the desired impact — remains to be seen.

But several sources within the Murphy administration, who asked for anonymity because they are not authorized to speak publicly on the proposal, said the impact could be twofold, both of ways that are beneficial to the state:

  • Companies could begin offering insurance to more employees;
  • Companies will pay the fee, contributing to the state’s coffers.

One official said the governor expects more companies to do the latter, since the $150 is less than the cost of providing health benefits.

Massachusetts, which has a similar practice, was used as a blueprint for the fee. They levy a fee of 5 percent of income per employee, officials said.

Michael Egenton, vice president of the New Jersey Chamber of Commerce, said health care remains a top issue, as businesses are faced with significant increases annually.

“Nobody has addressed the cost of health insurance; the (Affordable Care Act) addressed the accessibility of health insurance,” he said.

Egenton said that, while it is possible some companies would just absorb the cost of the fee, others may decide to offer health benefits because it makes their company more attractive to potential employees.

DHS data shows 956 employers are going to be affected by the new fee, but it remains unclear which ones.

While health care coverage continues to be a top concern for business, the New Jersey Business & Industry Association’s annual Business Outlook Survey in 2019 said it is less of a concern than a year ago.

In 2019, health care was the top concern for 20 percent of the businesses surveyed, down from 30 percent in 2018.

It was the fourth-most-important issue for businesses.

Read more from ROI-NJ on the budget: