Impact of Obamacare on State Medicaid Spending

Medicaid is a state-operated program that originally was intended to provide critical medical services for highly vulnerable populations.  Although the federal government assumes a large share of its financial cost (cost share), Medicaid still accounts for an increasingly significant proportion of state budget expenditures.  More than 12 percent of general fund spending was allocated to Medicaid in fiscal year 2010.

Penalty Tax on Individuals

– A requirement that individuals have insurance coverage or pay a penalty remains.

– Penalties are relatively modest:

2014     Greater of          $95 per person (cap of $ 285 per family)     or     1.0% of household income

2015     Greater of          $325 per person (cap of $975 per family)    or     2.0% of household income

2016     Greater of          $695 per person (cap of $2,085 per family) or     2.5% of household income

Employers Reaction to Obamacare ( Less than 50 full time employees )

Continue offering a ” qualified ” health care plan offered through a commercial carrier with the new fees, taxes and rating structures.

Completely discontinue offering medical insurance: no penalties incurred.  Hiring and retention may be a consideration.

Purchase the group health insurance through a state exchange.  Employer will contribute 50% of the employee premium and employees may be qualified for subsidies for their share.

Qualified association plans may be on the horizon offering medical benefits to its members’ employees.