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New Coalition Unites to Close “Walmart Loophole” in Health Care Law

New Coalition Unites to Close “Walmart Loophole” in Health Care Law

First-in-the-nation legislation aims to stop corporate giants from dumping health care costs on taxpayers

SACRAMENTO, CA – A new coalition of health care advocates, doctors, nurses and workers today announced that they will unite to make California the nation’s leader in protecting taxpayers by closing the “Walmart loophole” that encourages large, profitable companies to shift their health care costs onto state taxpayers.

“When big companies use the Walmart loophole to force workers onto Medi-Cal, taxpayers pick up the tab,” said Art Pulaski, Executive Secretary-Treasurer of the California Labor Federation. “Today we are putting legislators on notice that it’s time to hold big corporations accountable to pay their fair share for health care like the rest of us.”

On Thursday, members of the new “Fair Share Health Care Coalition” — including the California Labor Federation, the California Medical Association, United Food and Commercial Workers, and health care advocates — said they would join forces to pass AB 880 (Gomez) to close the Walmart loophole. Beginning tomorrow, the coalition will launch a statewide tour to draw attention to the escalating costs that taxpayers will face if Walmart and other companies keep dumping workers onto Medi-Cal, and to build support for the legislation that would make California the first in the nation to hold corporations accountable for paying their fair share for health care.

The Los Angeles Times, The American Prospect, and Huffington Post have each profiled the ways that large employers plan to circumvent their responsibilities under the Affordable Care Act by shifting their costs onto state taxpayers. By cutting hours and wages so low that workers qualify for care through Medi-Cal, these profitable companies plan to dodge federal penalties they would pay if workers earned enough to enroll in state health care exchanges.

New research from UC Berkeley shows that if California doesn’t act now, nearly 400,000 low-wage workers — especially those in the retail and restaurant industries — will be on Medi-Cal by 2019, with California taxpayers picking up the tab.

“AB 880 is a responsible solution that protects taxpayers when companies like Walmart dump their workers onto Medi-Cal,” said Assemblymember Jimmy Gomez. “This is common sense legislation that holds the biggest, most profitable companies accountable while exempting small and mid-sized businesses from new penalties.”

AB 880 is the first legislation in the country to tackle the growing problem of large employers attempting to push workers onto taxpayer-funded programs in an effort to avoid paying for ACA-mandated health care.

AB 880 closes the Walmart loophole in the ACA by requiring companies with 500 or more employees to pay a penalty for each worker that is on Medi-Cal. The fee is equal to the cost of a commercial health plan that a large employer would provide to employees. The fee will be pro-rated for the number of hours worked by employees enrolled in Medi-Cal.

Revenues from the penalty will be used to pay for the non-federal state share of the Medi-Cal program, to increase reimbursement rates for providers to care for Medi-Cal recipients and to shore up the state’s safety net.

“This bill encourages employer-based coverage for low-wage workers, prevents very large employers from shifting their health costs onto taxpayer-funded programs, and helps raise funds to improve Medi-Cal,” added Anthony Wright, Executive Director of Health Access California. “This legislation improves upon the Affordable Care Act to further encourage that part-time and low-wage workers get on-the-job benefits. This builds on the tradition of health reforms that have worked in Hawaii, Massachusetts, and San Francisco.”

“Already, California taxpayers are footing the bill for more than $32 million in health care costs that Walmart has dumped on us. That’s simply unfair,” said Jim Araby, Executive Director of the United Food and Commercial Workers. “If California leaders don’t take action soon to close the Walmart loophole, these costs will soar. That’s why we’re launching a statewide campaign to protect taxpayers and hold the state’s biggest companies accountable for paying their fair share for health care.”

“Ensuring California’s poorest and most vulnerable patients have access to care has long been a priority of the 37,000 members of the California Medical Association (CMA),” said Paul R. Phinney, MD, CMA president. “Given the low rates in Medi-Cal, there is no question the strain on the system will be insurmountable if employers stop offering employer-based coverage to their low-wage employees. Physicians stand behind AB 880 because it will help increase access to quality medical care for patients in California.”

The Fair Share for Health Care campaign will include media events across the state, targeted mailers and online efforts that make Californians aware of the costs at stake if the legislature doesn’t act to close the Walmart loophole.

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