:: Reluctant Massachusetts Tax Collector Has Good Reasons
Taxpayers are bearing a larger share of the cost of the expansion of healthcare coverage than expected because the state has not yet collected a penny from businesses that do not help insure their workers. Penalties on those businesses were expected to bring in $95 million this fiscal year and $76 million next year, according to the Legislature’s estimates when the bill was signed into law a year ago. “Mass. Has Yet to Collect Fees From Firms for Healthcare”, The Boston Globe (May 10, 2007)
The Massachusetts taxpayers bought into a much bigger financial obligation than they were told.
Here’s what the deal was supposed to be.
The law creates a “Fair Share Contribution†that employers will pay if they do not provide health insurance for their employees and make a fair and reasonable contribution to its cost. The contribution, estimated to be approximately $295 per employee, would go to the cost of the new program. Moreover, the law provides for a “Free Rider Surcharge” on employers that do not provide health insurance to their employees, but whose employees take advantage of free care.
What the Globe does not explain is that the “fair share contribution” is preempted by ERISA. That means that the revenue stream that was to support the plan will not be there when the bills come due. For an excellent analysis of why the law is preempted, see Professor Edward Zelinsky’s article (Cardozo), “The New Massachusetts Health Law: Preemption and Experimentation”, available on SSRN.
Odds are that the Massachusetts revenue officials are well aware of the decision in Retail Industry Leaders Association v. Fielder, 2007 WL 102157, C.A.4 (Md.) (January 17, 2007) declaring the employer tax in Maryland Fair Share legislation preempted. For now, they are letting sleeping dogs lie.
(Thanks to Paul Secunda for his May 3, 2007 post regarding Edward Zelinsky’s article.)
