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Employers and state governments are teaming up on health care in a move to help lower-income workers afford coverage they might otherwise have to pass up. At least 11 states already offer some subsidies to workers, and 14 more are considering such a move. In almost all instances, the state help is contingent on employers paying at least some of the premium costs. In Washington state, for example, employers would have to cover at least 40% of the premiums.
Most states are moving cautiously, afraid to commit to expensive new entitlements. But most states are enjoying healthy revenue growth that they can use for subsidies, and they usually get stuck with the tab anyway when the uninsured need care and go to public emergency rooms. Health spending, including Medicaid, accounts for one-third of state expenditures.
States planning to consider subsidies this year include Arizona, Colorado, Florida, Hawaii, Illinois, Louisiana, Minnesota, Montana, Nevada, Oklahoma, South Carolina, Tennessee, Washington and Wisconsin. Subsidy programs are popular because they lack the stigma that deters some workers from enrolling in public programs, and private coverage may provide better access because more providers participate in private insurance networks than in public ones.
More states will also give smaller companies more flexibility so they can afford to offer coverage. That often means allowing insurers to offer plans that do not cover all of the benefits the state requires for other insurance plans. For example, West Virginia allows the sale of “mandate lite” plans to part-time, temporary and seasonal workers. Arizona firms with up to 25 workers who have been uninsured for at least six months will also be able to buy scaled-down policies. Hawaii, Illinois and Maryland will weigh similar proposals.
Some states will also provide new tax credits to small employers who initiate coverage for their employees. Connecticut will mull a 25% tax credit. Look for New Mexico, Utah and Washington to consider tax credits for smalls, too.
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