Starbucks could be driven out of Rhode Island … another step down the Rhode to Serfdom!

Progressives in the Raimondo Administration are once again seeking to punish employers for not operating their private businesses the way this government wants them to. Governor Raimondo’s proposed “Medicaid Employer Assessment” is a new tax designed to force private sector businesses to pay for the state’s costly decision to expand Medicaid earlier this decade.

In a state struggling to attract business and families; a state tragically destined to lose a prized US Congressional seat because of its relative loss of population; and a state already with a bottom-5 ranked business climate … this new business tax would make matters worse.

And if Massachusetts is our guide … much worse. Ironically, because the Bay State imposed its own “MassHealth Tax” a few years ago, proponents of this blatant money grab now say the Ocean State should follow suit. What we should all know, however, is that this corporate Medicaid tax has proven to be an “absolute disaster” for Massachusetts, harming small and large businesses alike, according to the National Federation of Independent Businesses (NFIB).

Under this proposed new tax in Rhode Island, employers would receive a bill from the government, up to $1500 for each employee who chose to opt-in to the government’s own push to increase enrollment in Medicaid. The Governor’s misguided theory is that if employees are not covered by their employer’s insurance plan, full or part time, and instead have chosen to enroll in Medicaid, then the business should be punished. Unfortunately, in many such instances, it is out of the employer’s control.

Keep in mind that an employer cannot force an employee to accept their business-offered health insurance, because in America, people (for the time being) still have some choice to choose. In many cases, the employer likely does not know which of their employees may be enrolled in Medicaid

Further, it is not the responsibility of job-producers to pay for government’s bad decisions of the past. Regardless, the government is looking for money, and once again it is blaming job-producers … the lifeblood of our economy. Even more outrageous, some members of the RI business community, who are insider cronies of the Governor, have apparently endorsed this anti-jobs tax.

As our Center predicted six years ago, when Rhode Island opted to expand Medicaid under Obamacare provisions, the massive increased costs to our state would be unaffordable, without contriving some new scheme to extract more money from taxpayers or businesses. And now, here we are.

The negative impact has been so severe for some Massachusetts’ businesses, that:

• State lawmakers had to scramble to implement a “hardship waiver” to save them from closing their doors or moving out of state.
• For certain high-turnover industries, with a high-proportion of part-time workers, the MassHealth Tax has been devastating. Temp agencies and large company-owned restaurant and grocery chains (like Starbucks, Chipoltle, Cracker Barrel, Dave’s, and Stop & Shop) would be especially hard hit.
• Several MA lawmakers have filed bills to immediately repeal the MassHealth Tax even before the December 31, 2019 sunset date, because its negative impacts have been so severe for some.
• Seasonal job-providers in MA were less likely to hire workers during the summer months and holiday season in fear of triggering the new tax

Does RI really want to risk large employers not hiring lower income individuals in search of work because they may trigger this new tax?

The proposed Rhode Island Medicaid tax is different from the Massachusetts version in two important ways:

• Rhode Island’s Medicaid tax would initially apply only to businesses with 300 or more employees, while the MassHealth Tax would apply to large and small businesses.
• Unlike the temporary MassHealth Tax which had a two-year sunset period, Rhode Island’s Medicaid tax would presumably go on forever … with no sunset provision. This is especially dangerous because over time, and as is the case with virtually all taxes, it is likely that this unfair tax would be extended to include more and more businesses with lower numbers of employees

In summary, this Medicaid tax has been a nightmare for employers in Massachusetts.

But in following down this same failed path, Rhode Island would put more and more Ocean Staters on the Rhode to Serfdom.

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Related excerpts from the Governors proposed 2020 budget:

Pg. 4. Medicaid Employer Assessment: Too many Rhode Islanders are working multiple jobs without the benefit of health insurance through an employer. Medicaid is their only path to health care, placing the cost burden on taxpayers alone. The Medicaid Employer Assessment Fee charges large, for-profit employers with at least 300 employees an assessment for each employee they have on Medicaid, creating a shared investment in the health of Rhode Islanders. This is projected to generate about $14.5 million in general revenue.

Pg 15. Medicaid Employer Assessment: Too many Rhode Islanders are working multiple jobs without the benefit of health insurance through an employer. Medicaid is their only path to health care, placing the cost burden on taxpayers alone. The Governor recommends that for-profit employers of 300 employees or greater be assessed for each non-fully-disabled employee receiving Medicaid, so that these employers share the costs of Medicaid with Rhode Island taxpayers. The quarterly assessment would be 10% of those employees’ wages, capped at $1,500. This assessment, effective October 1, 2019, is expected to increase revenues by $15.6 million.