The Affordable Care Act (aka “Obamacare”) is based on the concept of shared responsibility – individuals, employers and the government are all supposed to pay their fair share. But Walmart found a loophole in the ACA big enough to drive a truck through; by keeping workers’ wages and hours so low that they quality for Medi-Cal, the employer can avoid its responsibility altogether. And when those workers end up on Medi-Cal, we the taxpayers are the ones who end up footing the bill.
California Labor Federation Executive Secretary-Treasurer Art Pulaski detailed this “Walmart Loophole” in today’s Orange County Register (subscription required):
Under the new Affordable Care Act, the costs of health care are shared between individuals, employers and government. Individuals must purchase health insurance. The government provides subsidies to help individuals and businesses afford coverage. Employers are required to provide affordable coverage or pay a penalty to offset some of the cost of public subsidies for their employees.
However, some of the state's biggest corporations have found a loophole that allows them to shift their costs onto taxpayers. These large, profitable employers are choosing to cut the hours and wages of their already-underpaid workers so those workers qualify for the taxpayer-funded Medi-Cal program. That way, they avoid the penalty for not offering affordable coverage to workers, and taxpayers pick up the tab, instead.
This loophole provides a perverse incentive for large, profitable companies like Walmart and Darden Restaurants (owners of Olive Garden and Red Lobster) to reduce workers' hours and cut wages to get out of paying their fair share of health care costs. For huge companies like Walmart, the loophole is a win-win. For workers, taxpayers and small businesses, it's a huge problem.
Indeed, the statistics are shocking. According to the UC Berkeley Center for Labor Research and Education, 250,000 workers for large companies are on taxpayer-funded Medi-Cal, and that number will grow to nearly 400,000 by 2019, unless we act now to close the Walmart Loophole.
Fortunately, there’s a solution on the horizon. AB880 (Gomez) would close the Walmart loophole and level the playing field by fining large private employers who shift workers onto taxpayer-backed Medi-Cal — and the proceeds would go directly into the Medi-Cal program that millions of low-income Californians rely on. The penalty wouldn’t impact small or medium-sized businesses; it would only apply to Walmart and other large companies that have 500 or more employees. And those extraordinarily profitable companies can certainly afford to pay their fair share for their workers’ health care.
Pulaski in the OC Register:
Walmart made $444 billion in revenue in 2012. The company's CEO raked in nearly $28 million last year. Paying its fair share won't bankrupt Walmart. But allowing big companies to avoid their responsibilities burdens taxpayers and threatens not only our health care system but other priorities like education, infrastructure and job-creation programs.
Nearly half of all workers on Medi-Cal who are employed by large corporations are in the retail and restaurant industries. The threats that Walmart and other big-box stores and restaurant chains will pull up stakes and move out of state are ludicrous. Their customers are here.
The bottom line is that everyone needs to pay their fair share. Taxpayers, small businesses and many large companies, like Costco, are doing their part. It's time we stopped allowing a few bad actors like Walmart the opportunity to exploit a loophole that should be closed.
By enacting AB880, California will lead the nation in making sure that these profitable companies can't pass off more costs to taxpayers than they already do. This legislation would protect workers, taxpayers and small businesses by dissuading mega corporations from skirting the rules. That's commonsense policy the California Legislature should embrace.
Learn more and take action at www.closethewalmartloophole.com.