Are Employers Who Dump Workers Onto Medicaid Corporate Welfare Queens?

There have been a lot of predictions about the future of employer-based health benefits under Obamacare. Reports suggest that increasing numbers of small businesses are dropping health benefits and sending their employees to Obamacare’s insurance exchanges, where they are partially subsidized.

Other businesses have found a bigger cost-shifting approach. BeneStream, a new benefits advisor, advises employers how to make their workers dependent on Medicaid, a welfare program fully funded by taxpayers. And businesses are taking advantage of its advice.

So: Are these employers corporate welfare queens?

Well, it depends on how you look at it. On the one hand, Medicaid is welfare. It is disturbing to see Medicaid categorized as “health insurance” in the same way employer-based benefits or individually owned policies are. Nobody would consider someone in a homeless shelter to be “housed” in the way that someone paying rent or a mortgage is.

On the other hand, these employers pay corporate income taxes, which many economists consider double or triple taxation (because both the employees and investors have also paid income taxes). So, one way to look at their taking advantage of Medicaid could be to categorize it as a perverse sort of tax rebate.

Whichever way you look at it, it is not an outcome that the politicians who gave us Obamacare told us to expect.


Comments (14)

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  1. Larry says:

    “So: Are these employers corporate welfare queens?”

    I would lean towards the former rather than the latter and agree that “It is disturbing to see Medicaid categorized as “health insurance” in the same way employer-based benefits or individually owned policies are.” There is a plethora of alternatives for corporations to pursue tax avoidance.

  2. Big Truck Joe says:

    Companies won’t dump it’s employees into Obamacare and Mediciad to save money just like they wouldn’t think of outsourcing call center jobs to India. Oh wait a minute – bad example. Companies won’t dump it’s employees into Obamacare and Mediciad just like they wouldn’t think of moving manufacturing factories to Mexico. Oh wait a minute – bad example.

    If it’s free money, and just like a welfare queen, companies will take as much as they can carry. It’s surprising that highly paid economists can never make the connection that the one commonality that all humans have is GREED and eventually, if one is bombarded with multiple opportunities to take something for free, they will succumb to their selfishness and become the welfare queen/king they once derided. Its only a matter of time.

  3. Dennis Byron says:

    A few years ago this was a very hot issue here in Massachusetts with the usual list of lefties bad mouthing Walmart, Target, CVS, etc. — not small businesses — for giving jobs to people who needed jobs. But it turned out the employer in the Commonwealth of Massachusetts with the largest number of its employees on such welfare programs (also included subsidized RomneyCare and the free care pool in addition to Medicaid) in Massachusetts’ FY2010was — drum roll, please — the Commonwealth of Massachusetts itself (see MarketBasket, the supermarket chain that was the darling of the left last summer, because the workers struck in support of one of the billionaire owners (yes, you read that correctly) came in fifth. The City of Boston made the list as well. Not surprisingly, the survey was apparently not repeated in FY2011 or since that I can find.

  4. Devon Herrick says:

    There is a misnomer that employers (i.e. entities who pay employees money to perform productive work) are humanitarians, that somehow own their workers health benefits. Economists have long known that workers themselves bear the cost; health benefits are just a non-cash form of compensation. If workers don’t fully appreciate the cost of health insurance sufficiently to forgo equivalent wages, then it makes no sense for the employer to provide it. By most accounts, workers who qualify for Medicaid generally prefer greater take-home pay to lower cash wages and costly health insurance.

    • Beverly Gossage says:

      My experience, as well. Most employees would rather have higher salaries than a benefit.

  5. John Fembup says:

    Seems to me that most of the same the people who want to move everyone into a government insurance plan, complain the loudest when companies (or even Commonwealths) move some of their employees into a government insurance plan.

    It’s as if when these people can’t have what they want, they mean to prevent anyone else from having what they want.

    Go figure.

  6. Bob Hertz says:

    This is perhaps a loose analog, but no one blames Walmart when their employees send their children to public schools.

    No one blames Target when a 65 year old employee goes on Medicare.

    If you have public programs, then employees at all levels will use them.

    If we had a firm employer insurance mandate in all of America, (which I am not sure is a good idea), then it would be disturbing if some employers snuck around the mandate and used Medicaid. Otherwise I consider it a non issue.

    • rex says:

      regardless of income you are provided public schooling. Same holds true for Medicare. In the current regulatory environment, there is an incentive to lower income so as to gain access to Medicaid. This is bad policy. In all cases, refundable tax credits were the family decides the final choice is better policy.

  7. Bart I. says:

    Here’s another question: are companies who provide health insurance –whose cost is 43% to 55% offset by federal and state tax breaks– also welfare queens?

  8. Erik says:

    It’s fraud. Plain and simple.

    So much for small government republicans.