On September 9 and 11, 2009, I noted a dangerous aspect of the Senate health insurance reform plan (which I called MaxTax, after Max Baucus) that would ultimately become ObamaCare: it would give Walmart and all other low-wage employers an incentive to keep its employees in poverty.
It was the only way to get them health insurance for free.
The MaxTax offers this one, giant, out for corporations.
A Medicaid-eligible individual can always choose to leave the employer’s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.
In other words, the one way–just about the only way–a large employer can dodge responsibility for paying something for its employees is if its employees happen to qualify for Medicaid. Under MaxTax, Medicaid eligibility will be determined by one thing: whether a person makes less than 133% of the poverty rate. And who has the most control over how much a particular person makes? Their employer!
So if Wal-Mart wanted to avoid paying anything for its employees under MaxTax, it could simply make sure that none of them made more than $14,403 a year (they’d have to do this by ensuring their employees worked fewer than 40 hours a week, since this works out to be slightly less than minimum wage). Or, a single mom with two kids could make $24,352–a whopping $11.71 an hour, working full time. That’s more than the average Wal-Mart employee made last year. So long as Wal-Mart made sure its employees applied for Medicaid (something it already does in states where its employees are eligible), it would pay nothing. Nada, zip. Nothing.
Saturday, HuffPo mapped out what I, too, have been watching. Walmart is making the changes necessary to prepare to do this–charge you and I for health insurance for its employees (actually, more of its employees, as it already uses this approach where it can), all premised on the legal poverty Walmart imposes on its workers–by kicking precisely those employees who will qualify for Medicaid off Walmart insurance.
Walmart, the nation’s largest private employer, plans to begin denying health insurance to newly hired employees who work fewer than 30 hours a week, according to a copy of the company’s policy obtained by The Huffington Post.
Under the policy, slated to take effect in January, Walmart also reserves the right to eliminate health care coverage for certain workers if their average workweek dips below 30 hours — something that happens with regularity and at the direction of company managers.
Labor and health care experts portrayed Walmart’s decision to exclude workers from its medical plans as an attempt to limit costs while taking advantage of the national health care reform known as Obamacare. Among the key features of Obamacare is an expansion of Medicaid, the taxpayer-financed health insurance program for poor people. Many of the Walmart workers who might be dropped from the company’s health care plans earn so little that they would qualify for the expanded Medicaid program, these experts said.
“Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan, which is one of the problems with the way the law is structured,” said Ken Jacobs, chairman of the Labor Research Center at the University of California, Berkeley.
I hate to say to the boy wonks who poo-pooed my concerns in 2009 I told them so. But I told them so.
What HuffPo doesn’t mention in its piece on this, though, is that this is all presumably by design.
Walmart, after all, was one of the partners behind the push for ObamaCare. In fact, as things started to drag in summer 2009, WalMart partnered with Center for American Progress and SEIU to try to nudge the process along. While the letter signed by the heads of all three organizations preaches of “shared responsibility,” it also talks of removing “the burden that is crushing America’s businesses” and an employer mandate that does not “create barriers to hiring entry level employees” (as workers forced into part time unskilled positions are sometimes facetiously called).
Walmart gave ObamaCare a lot of credibility back in 2009. It was clear then what the payoff was going to be. And they’re cashing in now: by making the poverty wages they pay their employees the trick to get us to pay their employee health insurance, rather than the billionaire Waltons who can afford it.
I guess that’s what Walmart believes constitutes “shared responsibility.”
Update: In other “I told you so” news, Liz Fowler–the former Wellpoint exec who wrote this legislation for Baucus–is headed back to industry to cash in.
I keep seeing these confident predictions from health care experts that no state would be so foolish as to reject the Medicaid expansion for their state. I want to set up a poker game with these people, to provide for my family in retirement. How many times can you say “well that’s so radical and extreme, it could never happen!” and be wrong before you review your assumptions?
The idea that you can just point to a set of numbers and say “but it’s almost all paid for by the federal government!” and convince ideologically motivated conservatives with that reasoning is really rich. The consensus opinion on the right is that giving free services to poor people puts them on the road to serfdom and crushes their innovative spirits and shackles them rather than allowing them to grow and succeed. Really they don’t want rich people to pay for “others” to get free stuff.
But I don’t even think the wonks have formulated the question properly, given that they are formulating it as wonks, rather than as partisan hacks.
Take Ezra’s formulation of the argument with regards to South Carolina, which has already announced it won’t expand Medicaid.
Take South Carolina. “We’re not going to shove more South Carolinians into a broken system that further ties our hands when we know the best way to find South Carolina solutions for South Carolina health problems is through the flexibility that block grants provide,” said Rob Godfrey, spokesman for Gov. Nikki Haley.
So how are those South Carolina solutions working out? Nineteen percent of the state’s residents are uninsured, which is well above the national average. When the Kaiser Family Foundation ran the numbers, they found the Medicaid expansion in the new law would cut South Carolina’s uninsurance rate among eligible adults by 56.4 percent. That’s the fourth-largest drop of any state in the nation. The cost of that for the federal government between 2014 and 2019? Almost $11 billion. For South Carolina? Less than $500 million.
In the short term, a rising Republican star like Haley might have reason to reject that deal. The Republican base hates the law, and so one way to build a national profile right now is to be the most implacable, unreasonable opponent of the Affordable Care Act.
But that won’t last forever. And governors also have to answer to non-Republican voters who don’t want their state missing out on billions in federal dollars, and to the hospitals in their state who have to treat uninsured patients that end up in their emergency rooms, and the insured voters who end up paying for their uninsured brethren.
What remains unspoken in these arguments (though DDay has addressed it)–even in the assessments of why these Red States already have such low rates of Medicaid coverage to begin with–is race.
Medicaid expansion in Red States is not going to be argued as “extending health insurance to uninsured adults,” but rather, “giving free stuff to people of color” (though that won’t be the phrase used).
Enlargement of Medicaid is the single most important provision of the Affordable Care Act for people of color. It’s the way that almost all non-whites covered by the law would receive insurance.