New Report: Taxpayers on the Hook When Corporate Giants Dump Workers onto Medi-Cal

For years, we’ve known big companies like Walmart have been shifting their health care costs onto taxpayers. Now a new report from the UC Berkeley Center for Labor Research shows just how widespread the problem is, projecting that as many as 380,000 workers for big companies will end up on the state’s Medi-Cal program by 2019.

For taxpayers, that’s a pretty tough pill to swallow. In 2011, Walmart made $447 billion in revenue. The company’s CEO raked in nearly $21 million last year. And yet, Walmart and other large companies don’t think twice about cutting workers’ hours and wages to such a low level that workers have to get health care through taxpayer-funded Medi-Cal. Even more infuriating, Walmart and companies like Darden restaurants (owner of Oliver Garden, Red Lobster and other chains) have openly flouted the Affordable Health Care Act’s (ACA) requirement — which mandates that companies either provide affordable health care to their workers or pay a penalty — by paying so little that workers end up on public assistance.

A new coalition that includes doctors, nurses, health care experts and labor unions pointed to the report as more evidence that California must take action to stop corporate giants like Walmart and Darden from circumventing their responsibilities under the Affordable Care Act (ACA). AB 880, authored by Assemblymember Jimmy Gomez, would protect California taxpayers by requiring these large employers to pay their fair share of the costs of healthcare when they dump workers onto Medi-Cal by cutting hours or wages.  Small and mid-size businesses would be exempt.

California Labor Federation Executive Secretary-Treasurer Art Pulaski:

Already, more than a quarter million California workers in big corporations are paid so little they end up on taxpayer-funded Medi-Cal, and today’s new report shows taxpayers could be forced to pay the tab for hundreds of thousands more. Profitable corporations that avoid their responsibilities to pay for health care must be held accountable. AB 880 ensures huge companies pay their fair share like the rest of us.

Central to the Affordable Care Act is the idea of shared responsibility — that employees, employers, and government all contribute to a stable, affordable health care system for all. Individual and employer penalties encourage every sector to do their part, but Walmart and other large, low-wage employers are avoiding the law. By driving wages and hours so low workers qualify for Medi-Cal, these corporate giants can avoid the penalties they'd pay if the workers earned enough to seek health care through the state healthcare exchange, Covered California.

The problem of big companies dumping health care costs on to taxpayers is getting more severe by the day.

Tom Kisken in the Ventura County Star:

Clinicas del Camino Real’s network of health centers routinely sees patients covered by government insurance, even though they work for national fast-food chains, huge retail stores, agricultural packing houses or technology firms, said Tony Alatorre, the network’s chief operations officer.

“Every day,” he said. “It’s common. Very common.”

AB 880 is a commonsense solution to this growing problem. The bill would assess a penalty on large companies that dump workers onto Medi-Cal. That achieves a couple of important goals. First, it removes the incentive for unscrupulous companies like Walmart to cut hours and wages just to get around the ACA. Second, by putting the revenues generated by the penalty into a special fund that can only be used for health care, it increases access to medical services for low-income Californians. As a result, the law closes the ‘Walmart Loophole’ and ensures that big corporations are paying their fair share of health care costs just like everyone else.

The United Food and Commercial Workers (UFCW), which advocates for better wages and benefits for workers in the retail industry, is a co-sponsor of AB 880.

UFCW Western States Council Executive Director Jim Araby:

Walmart pays its executives millions each year, and there is no reason it should get away with shifting its costs onto taxpayers. AB 880 protects taxpayers and small businesses by making sure corporate giants do their part so everyone can access health care.

Join the campaign to close the “Walmart Loophole” by sending a message to legislators today!