New Jackson Hewitt Analysis Only Captures Part of the Full Cost for WI Employers

A report issued last week estimates that employers in states that don’t expand Medicaid will pay up to $1.3 billion in additional federal taxes. As Jason Stein reports in an article posted late today on the Journal Sentinel website, the analysis by the Jackson Hewitt Tax Service estimates that not expanding BadgerCare coverage of childless adults to 133% of the poverty level will cost Wisconsin employers between $24 million and $36 million per year. However, that’s just the start of the cost for employers of the Governor’s plan. Under the Affordable Care Act, a tax will be imposed on larger employers (with at least 50 full-time equivalent employees) whose workers receive premium assistance tax credits for coverage purchased through the new health insurance exchanges. The new report estimates the cost for employers when currently uninsured adults between 100% and 133% of the poverty level are covered through the exchanges. The federal tax isn’t imposed for workers covered by Medicaid.

Although the Jackson Hewitt analysis is sound, as far as it goes, it isn’t an analysis of the Walker plan; so it leaves out a major factor that will substantially increase the tax imposed on Wisconsin employers if that plan is approved. The number of workers in our state who end up in exchange coverage will swell if the Legislature approves the proposal to end BadgerCare eligibility for adults over the poverty level – currently 89,000 parents and roughly 6,000 childless adults.

I hope to expand the report’s calculations to take that population of adults into account, and I’ll follow up after completing that additional portion of the analysis.

Jon Peacock