The Leaflet: The End of Dues-Skimming Could Finally Be Near

Published July 27, 2018

The Centers for Medicare and Medicaid Services (CMS) may soon end the controversial practice of union dues-skimming. On July 10, CMS issued a notice that it would accept public comments about a proposed rule ending states’ ability to divert, or “skim,” Medicaid payments from independent care providers to third-party entities, such as public unions. Although unions have been deducting agency fees from Medicaid payments since 1992, the Obama administration issued a rule in 2014 codifying the practice. Many claimed the Obama rule violated Section 1902 (a)(32) of the Social Security Act, which prohibits states from directing Medicaid payments to anyone but providers.

The review of the Obama-era rule is timely considering that public-sector unions received nearly $1.5 billion of taxpayer-funded Medicaid payments from 2000 to 2017. For years, public-sector unions have fought to increase their membership by reclassifying independent caregivers as pseudo-state employees so that they could be governed under public collective bargaining laws.

Independent caregivers, also known as in-home caregivers, provide much needed attention and assistance to low-income, elderly, and disabled individuals. Often, these caregivers are related to the person for whom they are providing care, such as a frail mother or physically disabled child. Many are paid directly by the state to care for Medicaid clients and are thus considered independent contractors.

Public-sector unions have lobbied state legislatures, cajoled sympathetic governors, and passed deceptive ballot measures to force independent caregivers to become union members. From there, unions were easily able to certify themselves as the official exclusive bargaining agent of the state’s in-home caregivers. In Illinois, no election was held for SEIU to represent caregivers; the union simply collected authorization cards from caregivers and remitted them to the state as proof of majority support.

In Harris v. Quinn (2014), the U.S. Supreme Court sided with in-home caretaker Pam Harris, and ruled that unions cannot forcibly take agency fees from home care providers. Unfortunately, this ruling was not enough to completely halt dues-skimming. The infrastructure authorizing their unionization still exists in 11 states (California, Connecticut, Illinois, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, Oregon, Vermont, and Washington). Moreover, in these states, unions continue to make it difficult for independent caregivers to opt out of membership. For example, in California and Oregon, caregivers have a 10-day window to decline union membership.

In the case of Medicaid, there is a fixed pie of funds for providers. One more dollar diverted to unions is one less dollar paid to care providers. If an individual caregiver wishes to join a union, he or she can do so and arrange to pay for dues on his or her own. Caregivers who do not want to join a union should be extended the same freedom of association without having to pay agency fees. Given that a significant portion of dues and agency fees fund unions’ political activity, this is a violation of the First Amendment rights of caregivers.

State legislators who believe in freedom of speech and freedom of association should submit comments to CMS stating their opposition to the practice of union dues-skimming. Comments can be submitted online until the end of the comment period, August 13, 2018. Legislators can contact The Heartland Institute if they need assistance in writing a comment or finding state-specific research.


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