Washington Democrats Abandon Push for Business Tax to Cover Medicaid Costs

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Washington state Democrats have likely abandoned plans for a new tax on large employers like Walmart and Amazon, whose workers receive health coverage through Medicaid. The proposal aimed to offset recent federal cuts to the Medicaid program, but faced criticism from businesses who argued it would add to their tax burden. Senate Democrats cited the complexity of the issue and the short legislative session as reasons for not advancing the bill this year.

Why it matters

The proposed tax was an attempt by Washington lawmakers to address the impending loss of billions in federal Medicaid funding due to recent congressional cuts and the introduction of new work requirements. However, the tax faced opposition from businesses who argued it would disincentivize hiring of Medicaid-enrolled workers and add to their existing tax burden.

The details

Under the proposed Senate Bill 6173, private companies with over 100 employees would have been required to pay a monthly fee of over $600 per worker enrolled in Medicaid. This was projected to generate over $950 million in revenue starting in the 2027-29 fiscal cycle. Large employers like Walmart, Amazon, McDonald's, and Kroger have a significant number of workers enrolled in Washington's Medicaid program, known as Apple Health.

• The Senate's budget committee was set to vote on advancing the legislation last week, but declined to take action.
• The tax wouldn't have taken effect until the federal Medicaid work requirements go into force in January 2027.

What they’re saying

What’s next

The state is planning to budget tens of millions of dollars to build out the computer infrastructure to enforce the new Medicaid work requirements, which could provide the data needed to potentially implement a tax on employers in the future.