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California bill would fine big firms whose workers get Medi-Cal

Proponents say it would eliminate a loophole in the Affordable Care Act that encourages employers to dump hourly workers onto the government dole. Opponents call it a job killer.

May 31, 2013|By Chad Terhune, Los Angeles Times

In 2004, UC Berkeley issued a report that found Wal-Mart workers' dependence on public programs in California, such as Medi-Cal and food stamps, cost taxpayers about $86 million annually. Nationwide, it estimated, the cost of public assistance to Wal-Mart workers could be as much as $2 billion annually.

Wal-Mart, the nation's biggest private employer, defends its employee health benefits.

"More than 75,000 people make the choice to work for Wal-Mart in California because most know that we offer the opportunity to build a career," said Delia Garcia, a company spokeswoman. "Our wages and benefits meet or exceed those offered by most competitors, and our healthcare offerings go beyond the eligibility and affordability requirements of the Affordable Care Act."

Last year the company raised the number of hours its newly hired part-time employees must work to qualify for health benefits: to 30 hours a week, up from 24 hours previously. Overall, Wal-Mart said, more than half of its 1.4 million workers are covered by company health insurance, and the company provides an employee-only plan starting at less than $38 a month with a $2,750 annual deductible.

Nationally, 40% of retail workers had employer health benefits last year, according to the Kaiser Family Foundation, compared with 62% of employees at all firms offering benefits.

The National Business Group on Health, a Washington trade group that represents more than 360 large employers across the country, said that the future of Medi-Cal funding is a worthwhile debate, but that this proposal isn't the answer.

"This raises the labor costs for so many employers by requiring healthcare to be paid on part-timers that it's not a practical solution," said Steven Wojcik, the group's vice president of public policy.

California and other states have been working to reduce the number of low-wage workers on Medicaid for the better part of a decade by pressuring employers to take more responsibility. Some states have opted for "naming and shaming" — publicly disclosing the companies with the biggest numbers of workers on Medicaid. Policy experts say that practice did spur Wal-Mart, for a time, to upgrade its health benefits.

In Ohio, Wal-Mart leads the state, with 17,679 employees and dependents covered by Medicaid. Fast-food giant McDonald's and the Kroger Co. grocery chain came in second and third, respectively, state data show. In Wisconsin, Wal-Mart topped the list with 9,207 workers and family members on Medicaid and a related children's health insurance program. California doesn't release those details.

Not all retailers put such a burden on taxpayers. Costco Wholesale Corp., which competes against Wal-Mart's Sam's Club stores, said it provides health insurance to 88% of its workers and guarantees all employees enough hours to qualify for benefits if they want them.

"We think we get better employees who want to stick around," said Richard Galanti, Costco's chief financial officer. "At the end of the day, somebody has to pay for their healthcare."

chad.terhune@latimes.com

Times staff writer Marc Lifsher in Sacramento contributed to this report.

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