Ironies Abound: Walmart Workers Who Lose Their Benefits Can Buy Obamacare Policies at Walmart!

wlmrtobmcrWalmart is the poster child of Obamacare’s perverse consequences. Early in October, the giant retailer announced it was dropping health benefits for workers who put in fewer than 30 hours per week—the definition of part-time employment, according to Obamacare. Walmart’s decision will affect about 26,000 American workers.

Jeff Anderson, executive director of Project 2017, has dug up an embarrassing letter co-signed by Walmart in 2009, urging President Obama to embrace healthcare legislation that included shared responsibilities, cost containment, and an employer mandate. Walmart and friends said they thought such reforms would ease the burdens crushing American businesses and hampering U.S. competitiveness in a global economy. But the real reason Walmart was eager for Obamacare to become law is that it wanted to drop the benefits they offered part-timer workers and have the federal government socialize these workers’ health care costs.

Journalist Sarah Kliff of Vox.com worked out the trade-off for a 36-year-old Walmart employee in Washington, DC, who works 29 hours per week at $12.73 per hour. “If Walmart does not offer her insurance,” Kliff writes, “she qualifies for a $1,751 subsidy from the federal government to help buy coverage on the exchange.” If she buys the lowest cost plan, her premium will be just $7 per month. But if Walmart does offer her coverage, she cannot get the federal subsidy. Her premium for Walmart’s plan will be $111 per month, according to Kliff.

Another way to put it is that the employee who works 30 hours a week suffers a tax hike of $104 per month, or $23.93 per week, relative to one who works fewer hours. The average Walmart associate earns $8.81 per hour. With that wage, the breakeven point for reducing hours is 2.72 hours above the 30-hour cut-off. That is, if she works 33 hours a week, it makes sense for her to stay full time. If she works 30 to 32 hours a week, it makes sense for her to drop back to under 30 hours.

Obamacare supporters have gone to great lengths to dismiss the fact that the Affordable Care Act motivates employers to reduce workers’ hours. One irony is that companies that support Obamacare have demonized Walmart for hiring part-time workers who depend on government transfer payments. Just last April, Americans For Tax Fairness accused Walmart of getting $6.2 billion in taxpayer subsidies indirectly, by paying workers wages so low that they qualified for food stamps, Medicaid, and other benefits.

A second irony is that Walmart is trying hard to get recognized as an innovative healthcare provider. For example, it has partnered with Kaiser Permanente to create in-store primary-care kiosks, offering consultations with allied health practitioners and telemedicine consultations with doctors off-site. That’s exactly the kind of innovation that will benefit low-income people especially. Unsurprisingly, Walmart has garnered praise from PwC’s Heath Research Institute for positively disrupting the healthcare-industry status quo.

One day before revealing that it was dropping benefits, Walmart announced it would expand into retailing health insurance in partnership with DirectHealth.com, enabling customers to enroll in Obamacare-compliant health plans through online, phone, and in-store services.

So, the final irony is that Walmart workers who lose their benefits can buy Obamacare policies in the store once their shift is over!

Two reforms would effectively correct this needlessly traumatic loss of coverage. First, a universal tax credit would eliminate the incentive for workers to drop hours. Second, allowing workers to claim subsidized health insurance where they prefer, instead of forcing them onto Obamacare exchanges, would allow Walmart to be consistent in its health-benefits strategy. Both reforms would take only a few lines in the Internal Revenue Code and would truly deliver on Walmart’s promise: “Save Money. Live Better.”

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