Maryland Gov. O’Malley Signs Legislation To Increase Taxes, Expand Medicaid Eligibility

Maryland Gov. Martin O'Malley (D) on Monday signed into law legislation that will increase taxes by $1.4 billion and expand Medicaid eligibility, the Washington Post reports (Wagner, Washington Post, 11/20).

Earlier in the day, the Maryland General Assembly approved the legislation, which will expand Medicaid coverage to more than 100,000 residents in five years and offer subsidies to as many as 37,000 small businesses to offset the cost of providing coverage to employees, according to the Baltimore Sun. The legislation increases the state's Medicaid income eligibility threshold for adults from 40% of the federal poverty level to 116%.

The measure also provides $30 million in annual subsidies for small businesses with fewer than 10 workers and their employees. The subsidies will be contingent on the company offering a wellness benefit.

The expansion eventually will cost more than $600 million annually, including $250 million in state funds and federal matching money. Legislators on Sunday agreed to add language to the bill stating that the expansion would occur only if voters approve a constitutional amendment on the November 2008 ballot that would legalize slot machines. Revenue from slot machines likely will help fund the expansion. The bill includes language that caps enrollment for childless adults if the program lacks funding (Smitherman, Baltimore Sun, 11/19).

The bill also includes a $1 per pack increase in the cigarette tax, as well as increases to personal and corporate income taxes (Washington Post, 11/20). In addition, $77 million will be transferred from the employee-sponsored health insurance fund to cover operating costs (AP/Washington Times graphic, 11/20). The changes will take effect Jan. 1, 2008 (Washington Post, 11/20).

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O'Malley said, "Not only were we able to restore fiscal responsibility so we can present historic investments in education and health care, but we were able to do that in a way that is a lot fairer." However, some tax experts say the tax changes will disproportionately affect low-income families, especially those who smoke (Rucker/Wiggins, Washington Post, 11/20).