Healthcare Tax Proposal ‘Unfairly Targets Employers’

Gov. Ned Lamont’s proposal to offset the loss of federal healthcare tax credits with a tax on employers has sparked widespread concerns from Connecticut’s business community.

The governor announced his proposal to tax employers $1,000 for every employee enrolled in Medicaid at an election campaign event June 19.

Lamont said the tax—a proposal that has periodically surfaced at the legislature over the past decade-plus—will generate $100 million in annual revenues.

The proposal targets for-profit businesses with 100 or more employees and nonprofits with 1,000 or more employees. Social service providers contracted by the state are exempt.

State Rep. Josh Elliott (D-Hamden), who is challenging Lamont in the Democratic gubernatorial primary election, has pushed the idea in the past.

‘Unfair’

CBIA president and CEO Chris DiPentima said the proposal “unfairly singles out Connecticut employers and risks further undermining private sector confidence and the state’s economic competitiveness.”

“Many factors influence an individual’s eligibility for Medicaid, including family size, household income, and personal circumstances that extend well beyond an employer’s control,” he said.

“Connecticut is already one of the most expensive states in the country to do business and penalizing employers for outcomes they do not determine creates a troubling precedent and effectively imposes a new tax on job creators.

“Penalizing employers for outcomes they do not determine creates a troubling precedent.”

CBIA’s Chris DiPentima

“Businesses make significant contributions through payroll taxes, corporate taxes, sales taxes, property taxes, health insurance premium taxes, and higher energy rates that subsidize residential rates.

“Additional financial burdens will discourage expansion, reduce job growth, and make Connecticut less attractive compared to neighboring states.

“A thriving private sector is essential for generating the revenues needed to support public programs, including Medicaid.

“Connecticut should focus on collaboration, not penalties, to achieve its healthcare and economic goals.”

Legislative Inaction

DiPentima noted policymakers’ inability to control spiraling healthcare costs and failure to resolve the lack of affordable, quality plan options for small businesses.

“State government policies are one of the major contributors to Connecticut’s high healthcare costs, with benefit mandates, taxes, fees, and assessments adding over $2,600 annually to the cost of the average family’s healthcare insurance policy,” he said.

DiPentima added that lawmakers this year again had an opportunity to address the healthcare affordability crisis affecting hundreds of thousands of Connecticut small business employees.

State government mandates, taxes, fees, and assessments add over $2,600 annually to the average family’s healthcare insurance policy.

Transformative legislation allowing small businesses to come together, pool their risk, and purchase health insurance through a trade association or local chamber of commerce was blocked in the Appropriations Committee after winning approval in the Insurance and Real Estate Committee.

“For years small businesses have asked for help as they face soaring healthcare costs amid the shrinking small group insurance market,” he said. 

“Unfortunately, some lawmakers put politics in front of good policy—penalizing small businesses rather than helping them and their employees navigate Connecticut’s growing affordability crisis. 

“Rather than targeting employers, policymakers should pursue collaborative solutions that strengthen the healthcare system, promote workforce development, and encourage economic growth.”