The New Jersey Business and Industry Association (NJBIA) raised concerns on Mar. 20 about a proposal in Governor Mikie Sherrill’s fiscal year 2027 budget that would impose new fees on employers with workers enrolled in Medicaid. The association said the plan could unfairly penalize businesses and may not achieve its intended goals.
The issue is significant because it affects both employers and employees across the state, potentially increasing costs for businesses while also impacting low-income workers who rely on Medicaid coverage. The NJBIA, which serves as the nation’s largest statewide employer association representing private-sector employers throughout New Jersey, has voiced strong opposition to the measure according to its official website.
Governor Sherrill’s proposal aims to raise $145 million by charging employers up to $725 annually for each employee covered by Medicaid or NJ Family Care. State health officials have projected that recent federal changes could eventually remove more than 300,000 residents from Medicaid and cost the state $3.3 billion annually in hospital aid. Michele Siekerka, president and chief executive officer of NJBIA, said, “We’re putting this onus on employers who are already dealing with sky high increases in health care costs annually, while neglecting the many reasons their employees choose purposely to stay on Medicaid.” She added, “It unfairly penalizes many job creators who already provide robust benefits, will disincentivize lower-income workers, and overall is unlikely to get to the intended policy end.”
Christopher Emigholz, NJBIA Chief Government Affairs Officer, testified before the Assembly Budget Committee that about 750 employers would be affected by the new tax. He questioned how an employer could be penalized for not providing health benefits to part-time or seasonal employees who may not qualify for such plans or decline them altogether. Emigholz also noted that Massachusetts discontinued a similar assessment due to challenges with part-time and teen employees.
Siekerka highlighted that many low-income or transient workers choose Medicaid over employer-provided plans due to concerns about losing coverage if they change jobs or face other life challenges such as childcare or transportation issues. She said these realities must be considered when imposing fees on employers.
Peter Chen of New Jersey Policy Perspective echoed some of these concerns during an interview with Siekerka: “But we’re concerned about potentially discouraging companies from hiring people who are on Medicaid, as well as discouraging potentially people from using the state insurance program because they’re worried that that might make them less employable.”
Both Siekerka and Emigholz pointed out potential overlap with existing federal requirements under the Affordable Care Act for large employers. They warned this could create duplication and legal complications.
The NJBIA advances competitive excellence among its members while delivering essential information and services according to its official website. It also facilitates partnerships among businesses, government entities, and academic institutions; offers advocacy; provides practical information; and delivers cost-saving benefits designed to support business prosperity according to its official website.
Siekerka concluded by calling for a broader approach: “Rather than a punitive assessment that will just continue to drive up costs for an already taxed business community, we should pivot to a comprehensive discussion about reform opportunities to drive the costs of healthcare down and provide incentives to the affected workforce who would then choose to get onto employer-sponsored plans.”