Report: “Walmart Loophole” Allows Big Employers to Undermine Affordable Care Act

By Rebecca Band, California Labor Federation

We all know that working for Walmart is no picnic. They pay low wages, they slash hours, they offer little or no job security, they exploit and intimidate workers and they use sweatshop labor. That’s why Walmart workers are on strike this week, to protest the corporation’s greedy behavior and shady business practices. Learn more about the strike here.

Many of these striking workers earn so little that they’re eligible for public assistance, like food stamps and Medicaid. And that’s no accident; it’s exactly the way Walmart likes it. We as taxpayers foot the bill for their workers, and the corporate head honchos get even richer.

According to a new report released today by the California Works Foundation:

[Walmart] workers use 40% more public health care assistance than the retail average. The company’s use of public assistance costs California $86 million per year, including $32 million for health care. The 19% of Wal-mart workers who are uninsured cost the state $10 million and the country $202 million. If other companies followed Wal-mart’s practices, it could cost the state $410 million.

And these figures could skyrocket next year when the Affordable Care Act goes into full effect. The law is intended to ensure shared responsibility between workers, employers and the government. But thanks to the “Walmart loophole” in the ACA, big corporations can easily skirt their responsibility by forcing workers onto Medi-Cal. From the report:

Under the ACA, there is no penalty for employers whose employees receive coverage through Medi-Cal or responsibility to offer coverage to part-time workers. When employers fail to share the responsibility for health care, they shift the burden to the individuals who are least able to pay for their own care or insurance, and taxpayers, who pay the costs of insurance through Medicaid and safety net health services at the county level.

According to the report, it’s the biggest and most profitable corporations that are the worst offenders when it comes to slashing wages and hours to dump workers onto Medi-Cal. Walmart isn’t the only one -- Papa John’s, Regal Entertainment Group, Krispy Kreme, Darden Restaurants (the owner of Red Lobster and Olive Garden), Burger King, McDonald’s, KFC, Dunkin’ Donuts, Taco Bell and Wendy’s have all publicly announced plans to cut hours and reduce employment in order to skirt their responsibility under the ACA.

And since the ACA also includes a major expansion of Medi-Cal for working families up to 138% of the Federal Poverty Line (which translates to $15,856 for a single individual and $32,499 for a family of four in 2013), even more low-wage workers at huge corporations will be eligible for Medi-Cal, and we as taxpayers will be footing an even bigger bill.

The report concludes:

 If large employers add their employees to the Medi-Cal program, the costs can quickly add up for the state and federal government. On average, a non-disabled adults on Medicaid spent $4,362 in 2011. Under the ACA, they would be able to shift their costs to the government program without penalty.

Employers’ conversion of jobs from full-time to part-time has been a driving force behind the increase in the uninsured population over the last two decades. Now with the ACA about to take effect, they stand to benefit even further from the expansion of Medi-Cal and the state’s outreach and education to inform low-income Californians of their health options.  Most employers and individuals will fulfill their responsibilities to provide or obtain coverage, but some large employers—those who are most able to contribute to health care coverage—are seeking an advantage at the expense of taxpayers and low income residents—those who are least able to afford the cost of health care—by pushing even more of their employees onto the Medi-Cal system.  This will only add to the challenges facing the state in successfully implementing the new health care law.