Health

Don’t Worry About The News That Walmart Is Dropping Health Coverage For 30,000 Workers

CREDIT: AP Photo/Chris Stewart

This week, Walmart became the latest big company to drop health coverage for some of its part-time workers. Following in the footsteps of businesses like Target and Trader Joe’s, the nation’s biggest private employer announced that it will end coverage for about 30,000 employees working less than 30 hours a week.

The news has inspired a fresh round of concern over the health care reform law’s impact on workers. Other companies have also recently cited Obamacare to justify their decisions to scale back on benefits or raise their prices, saying the law’s requirements simply make it too expensive for them to provide coverage.

When it comes to Walmart specifically, company executives say they’ve been somewhat indirectly impacted by health reform. Prompted by the national attention to the law’s new coverage options, more of their employees have signed up for Walmart’s insurance plans — something that health policy experts call the “woodwork effect” — which has ultimately increased the company’s health care costs. That forced Walmart to “make some tough decisions,” according to the company’s senior vice president for global benefits.

Although corporations have recently been tying these type of benefits changes to the Affordable Care Act, health policy experts say that’s not entirely accurate. In reality, the law provides a convenient scapegoat for companies to conduct business as usual.

“In the long term, this isn’t really news. Employers have long not covered their part-time employees,” Washington & Lee law professor Tim Jost told ThinkProgress, pointing out that Walmart in particular has a history of contracting health benefits for employees who aren’t full-time. “It’s part of a long term strategy to shift more of the costs of employer-sponsored coverage to employees.”

“Part-time employees working less than 30 hours per week generally weren’t getting offered health benefits to begin with,” Larry Levitt, the senior vice president for special initiatives at the Kaiser Family Foundation, told ThinkProgress via email. “These are typically low-wage workers with very little bargaining leverage.”

On top of that, since Obamacare’s insurance marketplaces give people a new option for getting insured that isn’t dependent on their employer, the part-time Walmart workers who are losing their coverage aren’t necessarily in a bad spot. They can probably get cheaper and more comprehensive health policies on the marketplaces, thanks to the federal subsidies that will help them pay for those plans. Federal subsidies are only available to people whose employers don’t offer them health insurance through their job.

“If part-time workers do get benefits, it’s often skimpy coverage and they have to pay a lot for it,” Levitt explained. “But, under the Affordable Care Act, simply getting offered benefits at work makes you ineligible for premium subsidies in the new health insurance exchanges. So, low-wage part-time workers are probably better off not getting offered skimpy coverage and instead applying for subsidies in health insurance exchanges.”

Vox’s Sarah Kliff ran the math on that, using the example of a 36-year-old Walmart employee in Washington, D.C. who works 29 hours each week at Walmart’s average wage of $12.73 per hour. That employee would pay an average of $111 per month for Walmart’s insurance plan. But, with the federal subsidies available for someone making her annual salary, she could get an Obamacare plan for just $7 per month — a better option that’s only available to her if Walmart drops her coverage.

According to the Kaiser Family Foundation’s large survey of employer benefits — perhaps the most comprehensive look at employer-sponsored insurance in the field — the portion of businesses that offer health benefits to their part-time workers occasionally fluctuates, but has remained largely stable over the past 15 years. Twenty one percent of firms offered coverage to their part-time employees in 1999, compared to 24 percent in 2014. But Jost says there’s an important difference between those two years: under Obamacare, people who aren’t working full-time now have other options if their bosses won’t give them health insurance.

“The big news is that alternatives are now available,” Jost said. “In the 1990s, if your coverage got dropped, you didn’t have any alternatives. You were just uninsured.”

White House Press Secretary Josh Earnest made a similar point when he was asked to comment about Walmart’s move on Tuesday. “I think people who reach that assessment are demonstrating a little bit of amnesia about what the health care market looked like prior to the passage of the Affordable Care Act,” he said in response to a question about whether part-time workers losing coverage is an unintended consequence of Obamacare. “It was not at all uncommon to read news reports of large companies making a decision to either reduce or eliminate health care benefits for their workers… The biggest difference now is that those 30,000 employees from Walmart that no longer have health insurance from their employer now do have a legitimate alternative.”

Walmart is actually involved in promoting some aspects of the health reform law to help get more foot traffic in its stores. Earlier this week, the company announced that 2,700 of its locations will be staffed with insurance agents to help customers enroll in new insurance plans, either through Medicare or through Obamacare’s private insurance marketplaces. Part-time workers who now need to enroll in Obamacare polices may have an even more personalized option: Walmart told the New York Times that a health coverage specialist will help guide them “through the process of finding alternative coverage.”