Gov. Ned Lamont intends to propose a levy Thursday on major companies whose employees rely on Medicaid for health care, seeking at least $100 million in new annual revenue to offset federal cuts that have driven up the cost of coverage under the Affordable Care Act.

The initial revenue target is roughly equivalent to the one-time subsidy the state is paying this year to offset the loss of federal tax credits that otherwise would have resulted in sharply higher premiums for low- and middle-income households seeking to buy health insurance on Connecticut’s exchange.

The Trump administration and Congress deadlocked last year over whether to continue the credits. At the same time, President Donald Trump’s One Big Beautiful Bill set other cuts in motion, affecting Medicaid and SNAP — and prompting Lamont and lawmakers to set aside $500 million in a Trump contingency fund.

Lamont said in an interview Wednesday that he intends to impose a fee on large companies equivalent to $1,000 for each of their employees who qualify for Medicaid.

“To me that’s a form of corporate welfare, which is inappropriate,” Lamont said.

A legislative study completed 15 years ago found then that Walmart had 3,654 employees on Medicaid in Connecticut, the most of any company. If in effect then, the $1,000 per employee fee would have cost the company $3.6 million.

Connecticut lawmakers between 2005 and 2010 directed nonpartisan researchers to produce several reports on the top employers of people who receive — or whose children receive — Medicaid benefits through the HUSKY program.

The General Assembly never enacted any of these so-called “fair share” healthcare fee programs. A 2006 measure was approved by the Labor and Employees Committee but was not debated by the Senate or House.

He said his election-year proposal, which comes as he faces a Democratic primary challenge from the left, is not aimed at one employer. But he is expected to present his plan at a midday press conference outside a Walmart.

Lamont’s proposal is a departure for a governor who generally has been wary about imposing new taxes or fees that could increase the cost of doing business in Connecticut.

“I’m pro business, but I also have to make sure if I propose something, I pay for it, not just this year with one-time money, but how we can do it on an ongoing basis,” Lamont said. “And that would involve raising some revenues, if in fact in November we find we have this need.”

That statement signals that Lamont is preparing for the likelihood Congress will not restore the tax credits, and he is looking for a way to permanently stabilize the health premiums and continue Covered Connecticut, which provides coverage for people whose incomes are a little too high for Medicaid.

“I’m trying to think of how I can provide some recurring revenues, not one-time things like we did with the Trump fund,” Lamont said. “I think this is a reasonable way to make sure that we continue to expand insurance for those small businesses and middle-class folks who are over and above Medicaid but not yet able to do it on their own.”

Lamont said the goal is to keep Covered Connecticut intact and continue subsidies for premiums on the exchange.

“Maybe even add to them a little bit,” he said.

Connecticut was one of the few states to offset the loss of the federal tax credits, and its subsidy actually resulted in more people getting coverage on the health exchange.

The idea of taxing, fining or otherwise demanding revenue from companies whose employees qualify for Medicaid is being debated in several states.

New Jersey Gov. Mikie Sherrill, a political moderate, wants to fine large employers with workers on Medicaid an aggregate $145 million by demanding payments of up to $725 annually for every person covered by the public health program.

Lamont said his administration is analyzing the number of working people on Medicaid, what type of companies employ them and how the state could “hold them accountable to the people that they don’t provide insurance for. Instead they float it onto the backs of the taxpayers.”

House Republican Leader Vincent Candelora issued a critical statement, saying Lamont’s plan, announced through his campaign, is a response to his progressive Democratic challenger, Josh Elliott. The “stiff primary challenge,” Candelora said, caused Lamont “to veer from his carefully curated ‘I’m a pro-business guy’ persona.”

“Governor Lamont unveiled his $1,000-per-employee Medicaid tax standing outside a Walmart because Democrats always need a faceless corporate villain. But this tax could hit a wide range of employers critical to our state and local economies, so the message this sends should worry every business in Connecticut,” he said, claiming that residents need state assistance due to the high cost of living rather than low wages.

Sen. Stephen Harding echoed Candelora’s comments about a affordability crisis in Connecticut, pointing to seven and a half years of “doing nothing” on electric bills as well as the rising cost of health insurance.

“And now he wants to tax large employers in Connecticut? Isn’t this the same governor who frequently says, ‘Connecticut doesn’t need more taxes; it needs more taxpayers’?” Harding said in a statement.

“Gov. Lamont claims he wants to do something about high health care costs, but year after year he won’t push for Association Health Plans which would do just that. He has nothing to say about the double-digit health insurance rate hikes we see annually in Connecticut.”

The governor said he expected the per-employee charge would be applied only to for-profit companies with at least 100 employees and nonprofits with 1,000 or more employees.

“I don’t want to burden the small businesses in any way,” he said.

Such a program would require legislative approval to be sought in January if he is reelected.

“We’re going through, best as we can analyze, what are those companies or major nonprofits that have an awful lot of people on Medicaid,” he said. “And maybe they’re part-timers, maybe limit their hours to 22 and you only provide health insurance for people working 30 hours.

“So, we’re calibrating how we would get reimbursed for those people on Medicaid.”

CT Mirror reporter Keith Phaneuf contributed to this story. Republican response was added to this story by the Hartford Courant. 

Mark Pazniokas is a reporter for the Connecticut Mirror. Copyright 2026 @ CT Mirror (Ctmirror.org).