Walmart's New Health Care Policy Shifts Burden To Medicaid, Obamacare
Posted: 12/01/2012
10:14 am EST
Updated: 12/01/2012 12:42 pm EST - The Huffington Post
Walmart, the nationfs largest private employer, plans to begin denying health
insurance to newly hired employees who work fewer than 30 hours a week,
according to a copy of the companyfs policy obtained by The Huffington Post.
Under the policy, slated to take effect in January, Walmart also reserves the
right to eliminate health care coverage for certain workers if their average
workweek dips below 30 hours -- something that happens with regularity and at
the direction of company managers.
Walmart declined to disclose how many of its roughly 1.4 million U.S. workers
are vulnerable to losing medical insurance under its new policy. In an emailed
statement, company spokesman David Tovar said Walmart had gmade a business
decisionh not to respond to questions from The Huffington Post and accused the
publication of unfair coverage.
Labor and health care experts portrayed Walmartfs decision to exclude workers
from its medical plans as an attempt to limit costs while taking advantage of
the national health care reform known as Obamacare. Among the key features of
Obamacare is an expansion of Medicaid, the taxpayer-financed health insurance
program for poor people. Many of the Walmart workers who might be dropped from
the companyfs health care plans earn so little that they would qualify for the
expanded Medicaid program, these experts said.
gWalmart is effectively shifting the costs of paying for its employees onto
the federal government with this new plan, which is one of the problems with the
way the law is structured,h said Ken Jacobs, chairman of the Labor Research
Center at the University of California, Berkeley.
For Walmart, this latest policy represents a step back in time. Almost seven
years ago, as Walmart confronted public criticism that its employees couldn't afford its
benefits, the company announced with much fanfare that it would expand
health coverage for part-time workers.
But last year, the company eliminated coverage for some part-time workers --
those new hires working 24 hours a week or less. Now,
Walmart is going further.
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gWalmart likely thought it didnft need to offer this part-time coverage
anymore with Obamacare,h said Nelson Lichtenstein, director of the Center for
the Study of Work, Labor and Democracy at the University of California, Santa
Barbara. gThis is another example of a tremendous government subsidy to Walmart
via its workers.h
In pursuing lower health care costs, Walmart is following the same course as
many other large employers. But given its unrivaled scale, Walmartfs policies
tend to influence American working conditions more broadly. Tom Billet, a senior
consultant at Towers Watson, a professional services firm that works with large
companies to develop benefit plans, said other companies are also crafting
policies that will exclude some part-time workers from medical coverage.
Billet portrayed the growing corporate interest in separating out part-time
workers as a reaction to another aspect of Obamacare -- the new rules that
require companies with at least 50 full-time workers to offer health coverage to
all employees who work 30 or more hours a week or pay penalties.
Several employers in recent months, including Darden Restaurants, owner of Olive Garden and Red Lobster,
and a New York-area Applebeefs franchise owner, said they are
considering cutting employee hours to push more workers below the 30-hour
threshold.
gIn the past, firms were less careful about monitoring whether someone was
full- or part-time,h Billet said, noting that some of his clients were planning
to track workersf hours more carefully. gI expect health plans like Walmartfs
wonft be uncommon as firms adjust to this law.h
For Walmart employees, the new system raises the risk that they could lose
their health coverage in large part because they have little control over their
schedules. Walmart uses an advanced scheduling system to constantly alter workersf
shifts according to store traffic and sales figures.
The company has said the scheduling system improves flexibility and efficiency. But
in recent interviews with The Huffington Post, several workers described their
oft-changing schedules as a source of fear that they might earn too little to
pay their bills. Many said they have begged managers to assign them additional
hours only to see their shifts cut further as new workers were hired.
The new plan detailed in the 2013 "Associatefs Benefits Book" adds another
element to that fear: the risk of losing health coverage. According to the plan,
part-time workers hired in or after 2011 are now subject to an gAnnual Benefits
Eligibility Checkh each August, during which managers will review the average
number of hours per week that workers have logged over the past year.
If part-time workers hired after Feb. 1, 2012, fail to reach the 30-hour
threshold, they will lose benefits the following January, according to the book.
Part-time workers hired after Jan. 15, 2011, but before Feb. 1, 2012, must work
at least 24 hours a week to retain coverage and will also be subject to an
eligibility check each year. Those hired before 2011 arenft subject to the
minimum hours requirements or eligibility checks.
As for full-time workers under the plan, those who lose hours and slip to
part-time at any point during the year will see their spousesf health coverage
dropped immediately. Those workers will also lose their dental and life
insurance policies in the following pay period, according to the plan.
Some Walmart workers who are excluded from the companyfs health care plans
are likely to become eligible for Medicaid under the Obamacare expansion, which
aims to replace a patchwork of standards now set by individual states with one
minimum federal threshold -- income below 133 percent of the federal poverty
line, which for an individual currently comes to $14,856. However, the Supreme
Court ruled earlier this year that the decision to expand the program is
voluntary for the states. At least eight states, including Texas, have said they will not expand the program, which would leave Walmart
workers there with one less option.
Part-time workers who lose their Walmart insurance but earn too much to
qualify for Medicaid should be able to buy insurance through the health care
exchanges to be established under Obamacare -- essentially, online marketplaces
offering an array of health care plans.
For workers who do qualify for health coverage under Walmart's new policy,
the latest package represents an upgrade over previous plans. Walmartfs health
plans began covering 100 percent of spine and heart surgeries this year at
select hospitals and medical centers. They also include a smattering of
preventative care services required by Obamacare.
But the companyfs plans still leave many workers facing significant financial
distress in the event of major illness. Under the new policy, one major
offering, the so-called Health Reimbursement Account Plan, costs nonsmoking
workers $34.80 a month -- a seemingly affordable sum. Yet it comes with an
annual deductible of $2,750, a hefty expense given that half of Walmartfs hourly
workforce earns no more than $10 an hour.
While a shifting of Walmart employees to Medicaid rolls may increase the
burden on American taxpayers, it is likely to be a better deal for the workers
themselves.
gThe packages Walmart is providing for low-income people arenft offering very
much coverage except for catastrophes,h said Linda Blumberg, a senior fellow at
the Urban Institute, a left-leaning think tank. gItfs likely theyfll be better
off going with a government-sponsored plan.h