Research & Commentary: It’s Time to End the Skimming of Union Dues

Published June 26, 2018

Medicaid is increasingly burdening the budgets of states, especially those that chose to expand under the provisions instituted by the Affordable Care Act (ACA). Across the country, taxpayers spend more than $545 billion annually on Medicaid. The primary goal of Medicaid is a noble one: to provide health care for the disabled and vulnerable and to help support low-income families by helping them afford health care.

According to the Department of Health and Human Services (HHS), the average cost of a Medicaid expansion enrollee was nearly 50 percent higher in fiscal year 2015 than the levels HHS had previously projected. Like many welfare programs, Medicaid has suffered from fraud, abuse, and an expansion of its benefits to able-bodied adults who are capable of working.

In order for Medicaid to continue to provide care to vulnerable and low-income families, it is important to ensure all funds given to the program are spent efficiently. Unfortunately, in 13 states, this isn’t occurring because millions of tax dollars meant to fund Medicaid services are being redirected straight into the pockets of public unions.  

Each year, about $41.5 billion of Medicaid funds are sent to states through the Home and Community-Based Services waiver program. Under this waiver program, individuals receiving Medicaid funds who are suffering from a disability, illness, or other chronic affliction can pay for in-home care instead of enrolling at a longer-term care facility. Often, family members, friends, or local in-home providers provide these in-home services. The funds are sent directly to providers on behalf of the patient. 

In several states, as part of an effort to obtain more cash, unions have successfully convinced policymakers to reclassify these in-home providers so that they are considered “state workers” and are thus subject to union rules and dues. In 11 states—California, Connecticut, Illinois, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, Oregon, Vermont, and Washington State—unions such as the Service Employees International Union (SEIU) have arranged for states to deduct agency fees out of these payments and to remit them directly to unions.

This scheme costs Medicaid patients and their caregivers in the 11 states with automatic agency-fee deductions an estimated $200 million annually, which is taken from the states’ Medicaid Home and Community-Based Services waiver fund. Several states also allow unions to operate the same scheme against childcare providers who receive payments through the Child Care and Development Fund and Temporary Assistance for Needy Families fund, collecting an estimated $50 million every year in nine states—Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington.

All told, dues skimming results in more than $250 million annually taken from critical programs designed to help the country’s most vulnerable citizens and sent to unions such as SEIU. It is not clear if the Medicaid patients or their caregivers receive any appreciable benefits for these dues. Lawmakers should clarify that these funds are designated for health care providers to cover the care they administer only; they should not be diverted for a non-health care purpose.

Beyond the costs, it is also important to recognize the fact that dues skimming violates worker freedom. Forced membership infringes on the rights of employees to associate as they see fit; home care providers should be given the choice of whether to join a union, not have it thrust upon them.

The following documents examine dues skimming and Medicaid spending in greater detail.

Dues Skimming FAQs
The State Policy Network examines the issue of dues skimming in detail, answering commonly asked questions, how the issue emerged, and what federal lawmakers can do to stop it.

Time For Congress To End ‘Dues Skimming
Rob Roper of the Ethan Allen Institute examines Medicaid dues skimming and argues Congress should act to end the practice. “By simply clarifying administrative rules, HHS could ensure Medicaid dollars are spent where they are needed — on caring for those in need. Congress could also prevent Medicaid funds from being wrongfully diverted to unions. Both solutions would free up more money for patients who deserve the best care possible, while allowing caregivers to spend their time where it’s needed — on serving their loved ones, not fighting unions,” wrote Roper.

How to Stop the ‘Dues Skim’ of Federal Home Health Care and Child Care Funding
Sam Adolphsen of the Mackinac Center outlines several ways the U.S. Department of Health and Human Services could modify administrative rules so that Medicaid and other government funds are used appropriately and benefit the people who actually need them.

Congress Must End Union Dues Skimming of Family Caregivers’ Paychecks
Thomas Aiello of the National Taxpayers Union argues Congress should move to end Medicaid dues skimming of family caregivers. “Ensuring Medicaid dollars are spent in a responsible manner and not to advance political motives should be common sense. But most importantly, this is an issue about protecting caregivers looking after their handicapped loved ones. Everyone should agree that hard working caregivers who make unbelievable sacrifices deserve to have a full paycheck,” wrote Aiello.

Don’t Wait for Congress to Fix Health Care
In this Policy Brief, Heartland Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled, even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs or submit even more ambitious requests for waivers to the Department of Health and Human Services – a suggestion the Trump administration has encouraged.

The Growing Medicaid Expansion Bubble
In this edition of the Consumer Power Report, Executive Editor Justin Haskins examines Medicaid expansion and all the problems it has created for states, physicians and patients. “Despite the lack of attention the issue is getting, the growing Medicaid population could lead to state government meltdowns around the country and a national health care crisis for which most Americans are completely unprepared,” wrote Haskins.

Here’s Why States Must Resist the Temptation to Expand Medicaid – 420cec6d5b80
Sally Pipes, president of the Pacific Research Institute, argues in this Forbes piece states should resist any push to expand Medicaid. Pipes recommends replacing Medicaid entitlements with block grants. “If governors and state legislatures really want to help low-income folks while keeping their budgets under control, they should insist Washington[, DC] replace the failed, open-ended Medicaid entitlement with block grants pegged to inflation,” wrote Pipes.

Government Report Finds Obamacare Medicaid Enrollees Much More Expensive than Expected – 75a85aba2dd0
Brian Blase wrote in Forbes the costs for newly eligible adults were not decreasing as expansion supporters predicted they would. Blase says in a new report, HHS says newly eligible adult Medicaid enrollees cost about 23 percent more than the Medicaid enrollees who were eligible prior to expansion.

The Oregon Experiment—Effects of Medicaid on Clinical Outcomes–effects-of-medicaid-on-clinical-outcomes
This article from The New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to being uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results showed no improvement in health for enrollees, but it did reveal better financial protections for patients and increased medical spending.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

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