Big companies will rip off taxpayers through Obamacare loophole

June 3, 2013 

The Affordable Care Act has the potential to expand access to health care for thousands of valley residents and spare taxpayers some of the costs of caring for the uninsured.

But, as with most complex laws, there are some loopholes.

Large corporations such as retail giant Wal-Mart plan to take advantage of a big one to push their responsibilities onto taxpayers. The new law requires large employers to offer health insurance to employees who work 30 hours a week or more. Unfortunately, some large, unscrupulous corporations, like Wal-Mart and restaurant chain Olive Garden are cutting back workers' hours and slashing wages rather than paying their fair share of health care costs.

The ACA is built around a partnership between government, individuals and employers to provide accessible, quality health care. But the loophole allows big companies to skirt their responsibility by cutting hours and wages so low that workers qualify for Medi-Cal. That way, corporations avoid paying a penalty under the ACA for not offering affordable health coverage, and taxpayers pick up the tab instead.

Assembly Bill 880, by Assemblyman Jimmy Gomez (D-Los Angeles), closes the loophole, protects taxpayers and boosts access to care for low-income valley residents. AB 880 would fine large employers who shift workers onto taxpayer-backed Medi-Cal, ensuring those companies are doing their part like the rest of us.

The penalties would only apply to low-wage companies with 500 or more workers, protecting small or midsize businesses. The bill doesn't punish well-intentioned employers trying to stay afloat. It just prevents huge, profitable corporations from dumping their costs onto taxpayers.

Proceeds from the penalty will go into a special fund that can only be used for Medi-Cal, easing the burden on taxpayers and increasing access to quality health care for millions of low-income Californians.

If this loophole isn't closed, taxpayers will feel the consequences right away. A study by the University of California at Berkeley Labor Center found that large corporations' employees on Medi-Cal will balloon to 400,000 by 2019 — a growing hit for taxpayers, our economy and an already overburdened Medi-Cal system.

Low Medi-Cal reimbursement rates for providers already have led to dangerous physician shortages, and Medi-Cal patients who can't find a primary care doctor seek preventive and other nonurgent care at emergency rooms — which cost taxpayers more.

Taxpayers should not have to compensate for large employers who refuse to pay their fair share, particularly considering Wal-Mart made $444 billion in revenue last year while the CEO pocketed nearly $28 million. These businesses are abusing our communities and small businesses, and AB 880 can stop it.

The last thing our economy needs is for large employers to cut hours to avoid offering health care, especially if taxpayers are asked to pay the tab.

California should lead the nation by closing this loophole in the ACA, in order to protect taxpayers and patient care. If corporations do not pay their fair share, they should, in the very least, pay a fine to defray some of the costs to taxpayers.

Loza is president of the North Valley Labor Federation, which represents union members in Stanislaus and five surrounding counties.

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