Should Businesses Move Employees to Medicaid?

by Kevin Kane, Lead Organizer

There's an interesting piece in Forbes by Benjamin Geyerhahn on how businesses should look to Medicaid as a way to hold down employee health costs. In some respects this argument gives me pause, but it is a worthy one to hear:

"Your company can take advantage of this program by helping low-income employees enroll in Medicaid, thereby keeping your business’s healthcare costs down."

As far as Wisconsin goes, Medicaid enrollment amongst low-wage employees of large employers is already rising. Companies like Walmart have more employees on BadgerCare (Medicaid) after Walker's changes than ever before. This says a lot for low-wage employers, since now the only people allowed on BadgerCare are those BELOW the poverty line (further expressing the need for a higher minimum wage). But working families with incomes just above the poverty line are left to rely on whatever their employer offers them, or must shop for a plan on the marketplace, Healthcare.gov.

I am generally not in favor of companies seemingly "dumping" employees on public systems, but that's actually not what's being argued in the Forbes piece. Large employers are able to negotiate large group health plans for their employees at cents on the dollar of what you and I can individually.  As such, employer health coverage needs to be an integral part of the health system for the time being. That said, it is better for everyone that low-wage employees, those under the poverty line, are on BadgerCare.

If you're a working person and you earn less than the poverty line ($11,770 for an individual), chances are you can't afford much of anything in the way of sizable premiums, co-pays or high deductibles from an employer health plan. Furthermore, we know that this income group tends to less healthy due to limited access to timely care - a fact that pushes up the risk for insurers and thus the cost of coverage. And for businesses the benefit is clear: each employee on Medicaid/BadgerCare is one less they are paying for on the company health plan. Not to mention, Medicaid gets even better deals than large group plans per person.

Which pushes those denied BadgerCare in Wisconsin - the 81,000 give or take who earn between 100% to 138% of the poverty line (the difference between $11,770 and $15,654 for an individual) - onto the marketplace or employer health coverage. This results in either a direct increase in costs for employers to pay for employee premiums, or indirectly increases the employer mandate cost by refusing to offer coverage. Community Advocates Public Policy Institute estimated the failure to accept federal funds for BadgerCare will cost employers over $60 million a year in penalties alone. This is where I agree the most with the Benjamin Geyerhahn article:

"Contact your state representatives and express your support for Medicaid expansion...Outline the reasons Medicaid expansion would benefit your employees, your business, and your local economy. You might even encourage your shareholders and fellow business leaders to do the same."

Businesses can and should start getting the message out: the enhanced Medicaid funds for BadgerCare helps everyone, including businesses. The Milwaukee Metro. Association of Commerce already recognizes this, and more and more will do the same.

By the way, another thing to keep in mind: employers who move workers to BadgerCare or the marketplace may save money, but they reduce their benefit package to employees (which is similar to a pay cut). These employees may be more likely to leave when the economy gets better and/or less likely to accept unfavorable working conditions. I view this increased labor mobility as a good thing, but some employers concerned with turnover may not. 

- Kevin.kane@citizenactionwi.org

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