Rising costs and workforce challenges continue to be top concerns for Colorado employers, and a new proposal at the Capitol could add significant pressure to both. This week, we’re watching House Bill 1327, which would require large employers to pay a fee for employees that receives benefits under the state medical assistance program.
The bill creates a new state enterprise within the Department of Health Care Policy and Financing to collect these fees from employers whose workers receive medical assistance benefits.
The Colorado Chamber’s Labor & Employment Council has taken an opposed position on the bill due to concerns that it places a new and burdensome financial mandate on employers to fund a state-run program. Business leaders warn the proposal effectively acts as a tax on jobs, particularly impacting employers that rely on part-time or entry-level workers.
HB 1327 could have significant workforce implications. Employers may be forced to reduce hiring, cut back on part-time positions or limit opportunities for workers who rely on flexible jobs, such as students, parents, seasonal workers and individuals reentering the workforce. As a result, fewer job opportunities would make it more difficult for these individuals to earn income and maintain access to benefits, including Medicaid. Medicaid is intended to support low-income workers, not create disincentives for employers to hire them.
The Chamber is also concerned about the broader economic impact. Employers are already facing rising costs from a range of policies and economic pressures, and this bill would add between $15 million and $100 million in new annual costs. This proposal could further strain business operations, leading to higher prices for consumers, reduced investment or even business closures.
In addition, the bill raises serious legal and practical concerns. Federal law tightly regulates Medicaid funding, and similar policies in other states have faced legal challenges. Employers also may not have access to the information needed to determine which employees are enrolled in Medicaid, making the proposal difficult to implement.
Meghan Dollar, senior vice president of governmental affairs and political operations for the Chamber, testified in opposition of the bill on Tuesday.
“Feeing or taxing Colorado businesses is not the way to solve Colorado’s budget crisis or the problems with Medicaid like fraud and mismanagement,” Dollar said in her testimony. “Colorado needs real solutions – not policies that cost jobs, raise prices and create legal uncertainty.”
HB 1327 passed in the House Health & Human Services committee in a 8-5 vote.