Walmart Uses Obamacare to Shift Costs to Taxpayers

Published December 3, 2012

Consumer Power Report #352

Since the inception of President Barack Obama’s health care law, I and others in the libertarian community have argued this law represents a massive corporatist project – that under the guise of achieving subsidized universal coverage, major corporations would use the approach to undercut their competitors by raising the costs of small businesses and shift their own costs to the American people. Chief among the corporate cronyists who use their political lobbying power to bend policy to their will was Walmart, typically thought of as a conservative company, which saw an immense opportunity and chose to support the law. And they got exactly what they wanted from it.

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.

Walmart declined to disclose how many of its roughly 1.4 million U.S. workers are vulnerable to losing medical insurance under its new policy. In an emailed statement, company spokesman David Tovar said Walmart had “made a business decision” not to respond to questions from The Huffington Post and accused the publication of unfair coverage.

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.

The effect is to move tens of millions of workers from their employer health plans to the taxpayer dole. Chris Jacobs writes:

One major bottom-line question in this development relates to how many more people will be added to government health rolls by this apparent trend.  In last month’s job data, the Bureau of Labor Statistics estimated nearly 28 million Americans work part-time – defined by the BLS as fewer than 35 hours per week.  Using Obamacare’s less stringent 30 hours per week standard would reduce that 28 million number somewhat – and many part-time workers do not have access to employer-provided health insurance currently.  (Of firms offering insurance to their employees, 28% extend that offer to part-time workers as well – a fact which only indirectly illuminates the number of part-time workers receiving insurance coverage from their employer.)

Keep in mind, Walmart is behaving rationally here. Its corporate leaders saw an opportunity to make taxpayers bear the costs of their health insurance program in full and took it. They hired the money necessary to make this project happen, and now all of us will bear the costs of it (that’s before we get to bearing the costs of Walmart’s immense chunk of the food stamp distribution, but that’s another story). Can you blame them for it?

Well, actually, I think we can. Rent-seeking and corporate cronyism has a long history in the United States but it does not make it any more honest or any more justified. It is inherently an act of cowardice: Rather than compete and win on the same fair playing field, it is a system where to the rigger goes the spoils. Only big business can afford big government, and the more it leans on it for the sake of short-term market gains, the more it undermines the system of equal competition that made their achievements possible in the long term … and if history is any guide, merely makes them the last item on the government’s menu when the time comes.

— Benjamin Domenech



Want to sell insurance through the federal exchanges? That’s a tax.

The Obama administration said Friday that it would charge insurance companies for the privilege of selling health insurance to millions of Americans in new online markets run by the federal government. The cost of these “user fees” can be passed on to consumers. The proposed fees could add 3.5 percent to premiums for private health plans sold in insurance exchanges operated by the federal government …

The exchanges are supposed to be financially self-sustaining after 2014. States, like the federal government, can charge fees to insurers. Or they can try to raise money in other ways – for example, by charging consumers or employers for using the exchange.

In proposing the new rule, Kathleen Sebelius, the secretary of health and human services, said that fees charged by the federal government would be “sufficient to cover the majority of costs related to the operation of federally facilitated exchanges.” She did not say how the remainder of the money would be raised. Ms. Sebelius said she could not estimate the total amount of federal user fees because she did not know exactly how many states would have federal exchanges. She said the federal fees should generally be “commensurate with fees” charged by state-run exchanges …

Fees charged for use of the federal exchange come on top of a separate annual fee to be imposed on health insurance companies to help offset the cost of expanding coverage under the new law. The annual fees, to be apportioned among insurers according to their shares of the nation’s health insurance market, are expected to total $6 billion in 2014 and more than $100 billion over 10 years.

“Any new fees to pay for the administration of exchanges will add to the cost of coverage,” said Robert E. Zirkelbach, a spokesman for America’s Health Insurance Plans, a trade group.

Erin Shields Britt, a spokeswoman for Ms. Sebelius, predicted that insurers would not raise prices.

A tax that doesn’t lead to price hikes? Wow! If that’s the case, as Michael Cannon notes, why not make it a much bigger tax?

SOURCE: New York Times


Interesting data from the latest polling.

For the first time in more than a decade, a majority of Americans say it’s not the government’s responsibility to ensure access to healthcare.

A new Gallup survey shows an all-time low in public support for a government guarantee of healthcare coverage – just as President Obama’s healthcare law is bringing that guarantee dramatically closer to reality.

Only 44 percent said it’s the government’s responsibility to ensure that all Americans have access to healthcare coverage, while 54 percent said healthcare access is not the government’s responsibility.

It’s the first a majority of the public has opposed a government guarantee.

Gallup has been asking the question for 12 years, and support for a government guarantee of healthcare has fallen steadily under President Obama.

In 2007, 64 percent said the government had a responsibility to ensure that all Americans have access to healthcare, which fell to 50 percent during the grueling healthcare debate of 2009 and 2010 until finally slipping below the halfway mark in the latest survey.

The drop has mostly come from Republicans, Gallup said. Thirty-eight percent of Republicans said in 2007 that healthcare access was the government’s responsibility, down to just 12 percent now.

Most voters in the Gallup survey have never believed the government should provide healthcare benefits – only that it should guarantee access to some form of coverage. Support for a system based on private insurance is roughly unchanged.

Americans are deeply unsatisfied with the U.S. healthcare system, and they have been for years. The latest survey found that 69 percent of Americans think the healthcare system is in a state of crisis or has major problems, down slightly from its peak of 73 percent in 2010.

But asked specifically about the quality of healthcare coverage in the U.S., 41 percent said it’s “good” or “excellent” – a record high.

SOURCE: The Hill


Stuart Taylor on the lay of the land:

By far the broadest and potentially most damaging of the legal challenges turns on whether Congress intended that tax credits and subsidies to help consumers buy health insurance be available only through state-created exchanges. Many states are signaling that they may not create their own exchanges, leaving the federal government to do so, as the law requires.

If subsidies and tax credits aren’t available in states with federally run exchanges, conservative legal scholars say, then two other lynchpins of the law would also be undermined: the requirements that employers of a certain size offer insurance and that most individuals buy insurance.

Supporters of the law scoff at the arguments, asserting that Congress clearly intended that the subsidies and credits would be available in all exchanges.

But, confident of their case, some health law opponents, including Jonathan Adler of Case Western Reserve Law School, Michael Cannon of the libertarian Cato Institute and National Affairs editor Yuval Levin, are urging Republican-led governments to refuse to set up the online insurance purchasing exchanges, which would, as the argument goes, make their residents ineligible for the tax credits and subsidies. They say that this step also would gut the so-called employer mandate, which the law says will take effect in states where residents are eligible for such assistance.

The mandate requires employers with more than 50 full-time workers to offer health insurance policies for employees and their families that include a minimum set of benefits, or pay a tax of $2,000 per employee for failing to do so. The tax wouldn’t apply to the first 30 workers.

Health law critics theorize that by refusing to set up exchanges, states could also carve a hole in the provision that requires individuals to either obtain insurance or pay a tax as a consequence of choosing not to, which the Supreme Court upheld in June. And if states could disable both the employer mandate and part of the individual mandate, they could wreak havoc with the law’s overall operation.

More from the Goldwater Institute on why you should oppose exchange implementation.

SOURCE: Kaiser Health News


A $43 billion gap:

The full extent of U.S. spending on Medicaid, the $459 billion state-federal health insurance program for the poor, is unclear because of mismatches between government databases, auditors reported.

A $43 billion gap showed up in a comparison of 2009 spending data from the states, which run Medicaid, and the U.S. Centers for Medicare and Medicaid Services, which pays for more than half the program, according to a report released today by the Government Accountability Office. In a separate report, the inspector general for the U.S. Health and Human Services department said the agency hadn’t audited about $4 billion in payments to doctors and hospitals for installations of electronic record systems.

Medicaid is central to President Barack Obama’s health-care law, which will expand the program beginning in 2014 to cover all Americans earning wages close to the poverty line. Obama has also prioritized electronic health records, allocating about $27 billion in his 2009 economic stimulus law for medical providers who install them.

Delays in reporting the data and inconsistencies between the two databases “limit their usefulness as oversight tools,” auditors said in the report. States are supposed to report one set of Medicaid spending to the federal government within 45 days of the expenditures. The statistics can be as many as three years late, GAO said.

Hospitals are under increasing scrutiny for their use of computer systems to increase their billings to Medicare, the $591 billion U.S. health program for the elderly and disabled. Doctors and hospitals are supposed to prove they are “meaningful” users of the records to receive government payments for installing the systems.

SOURCE: Bloomberg Business Week


A liberal asks: What did we just do?

I understand that the hope is that it will be cheaper and quicker to treat your 32 million new Medicaid and exchange-based insured now that they are showing up regularly with insurance rather than showing up in severe crisis only.

But Massachusetts has been walking down this exchange-and-public-program-expansion road for six years now, since Mitt Romney signed RomneyCare. Massachusetts has been vacuuming up doctors and nurses from Costa Rica and elsewhere and still has been finding that the cost of treating your state population is higher when 97% are insured than it was when 88% were insured. And there aren’t enough loose doctors and nurses in the rest of the world for the ACA to vacuum up enough of them to meet the needs of not 1 state but 50 states.

The investments in medical infrastructure and workforce – less than $30 billion for 32 million newly insured, less than $1000 for newly insured – seem an order of magnitude low.

What is your guess as to what will happen if the ACA works for access, works for quality, works for coverage – but the extra health-care workforce needed isn’t there, and the lines start to get longer?

SOURCE: Brad Delong