Senate Free Rider Provision Gives Nation's Largest Employer a Free Ride

UFCW Releases Briefing Paper Detailing How Free Rider Provision Would Incentivize Irresponsible Walmart Employment Practices and Diminish Shared Responsibility for Health Care Reform

• Press Release
• Source: United Food and Commercial Workers International Union (UFCW)
• On 11:35 am EST, Wednesday November 4, 2009

WASHINGTON--(BUSINESS WIRE)--The United Food and Commercial Workers International Union (UFCW) released a briefing paper, today, examining the impact of the Senate’s Free Rider provision on the nation’s largest private employer – retail giant Walmart. The provision would have the unintended consequences of:

• Providing little or no incentive for Walmart to provide better care to its workers;
• Continuing Walmart workers’ dependence on federal and state subsidies for Medicaid and Medicare, and encourage Walmart to have even more workers dependent on Medicaid and Medicare;
• Making few, if any, Walmart workers eligible for tax credits to purchase better insurance through the health insurance exchange;
• Forcing low-income Walmart workers into high-deductible company-provided insurance;
• Incentivizing the hiring of a largely part-time workforce, and encourage reducing workers’ hours as a way to reduce health care costs.

The Free Rider provision currently would require that, if an employer with more than 50 employees has employees who receive a subsidy (i.e., tax credit) for insurance through an exchange, the employer has to pay a penalty that is the lesser of: The average national tax credit for insurance through exchanges multiplied by the number of full-time employees receiving the tax credit; or $750 times the total number of full-time employees of the company.

But if an employer has only part-time employees receiving tax credits for insurance purchased through an exchange, the employer pays no penalty. Employers also pay no penalty for workers who are on Medicaid or Medicare. And if employers offer bare bones, but high deductible, high co-pay coverage with low premiums, workers would be forced to accept this coverage, purchase coverage through an exchange without receiving tax credits, or pay a penalty for being uninsured—with the employer facing no penalty under the current free rider provision.

Walmart’s employment practices, including limited hours and pay that force many onto public assistance, as well as its cafeteria of health care plans that range from unaffordable premiums to unaffordable deductibles and co-pays for low end premiums would virtually exempt its workers from receiving tax credits for purchasing coverage through an exchange, and, consequently, exempt the company from any free rider penalty.

“A Free Rider provision that would have zero impact on Walmart is a problem,” said UFCW Executive Vice President Pat O’Neill. “The company employs 1.4 million workers in our country, and nearly 700,000 of those employees already get their health care insurance from public assistance, in the emergency room, or a spouse who has a responsible employer. President Obama laid down the principle that health care is a shared responsibility. If the country’s largest employer has no responsibility under the Senate Free Rider provision, then other employers will follow the Walmart example.”

Go to www.wakeupwalmart.com for a complete copy of the UFCW Free Rider Briefing Paper.

A further supporting actuarial analysis by the Segal Group of the value of a sample Walmart’s health plans is available online.

United Food and Commercial Workers International Union (UFCW)
Jim Papian, 202-466-1564
or
Jill Cashen, 202-728-4797
or press@ufcw.org