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An Unintended Consequence of Obamacare.

Posted Dec 12 2012 5:19pm
Stanley Feld M.D.,FACP,MACE

As we get closer to full implementation of Obamacare in 2014 corporations such as Wal-Mart are figuring out ways of avoiding healthcare insurance coverage for their employees.

Darden Restaurants, owner of Olive Garden and Red Lobster, and a New York-area Applebee’s franchise owner has announced that they will limit hours worked to under the thirty hours a week threshhold. They will simply hire more employees who will work less than thirty hours a week.

It will mean that those workers will be forced to work two jobs if they can. With the unemployment rates remaining high this might be difficult.

“iNew Obamacare rules that require companies wi th at least 50 full-time workers to offer health coverage to all employees who work 30 or more hours a week or pay penalties.”

However, these people might not be eligible for Medicaid coverage under Obamacare.

The definition of eligibility depends on the state rules. HHS just announced rules for Medicaid expansion. The goal of these “Medicaid Expansion Rules” is to force states to participate in the expansion of Medicaid.

States must increase Medicaid eligibility to 133% of the poverty level in order to receive 100% of the matching federal funds made available under Obamacare.  A state will receive mating funds from January 1,2014- January 1,2017.

After January 1,2017 the states are on their own. The increase in enrollees will become a huge burden.

President Obama is counting on the states to assume the cost of Medicaid as he has the CBO calculate his fictitious scoring on the cost of Obamacare.

The Federal Poverty Level was defined inaccurately in 1955. The U.S. still uses the 1955 criteria.

133% Federal Poverty Level for one person means an annual income of $14,856. For a family of four it means $30,657.

Many states have poverty levels above the nationally defined levels. In Indiana the eligibility level for Medicaid is an annual income below $63,000 for a family of four.

An independent restaurant owner and caterer, in the smallish town of McKinney Texas, employs 55 people full time.  He told me he is going to have to fire 6 people in order to avoid the Obamacare rule. He must also reduce hours worked to below 30 hours per week.

He must also contract his business rather than expand it.  He cannot afford the $110,000 Obamacare penalty.

It plans to begin denying health insurance to newly hired employees who work fewer than 30 hours a week starting January 1st 2013 to avoid the Obamacare penalty for not providing healthcare coverage for employees.

Wal-Mart also reserves the right to eliminate health care coverage for employees whose hours drop under 30 hour per week.

Tom Billet a senior consultant at Towers Watson said,

”Some of his clients were planning to track workers’ hours more carefully. “I expect health plans like Walmart’s won’t be uncommon as firms adjust to this law.”

 Wal-Mart’s decision to exclude workers from its healthcare plans is an attempt to limit costs while taking advantage of Obamacare.  Obamacare is going to have to expand Medicaid coverage well beyond 31 million people.

Many of Wal-Mart’s employees would qualify for the expanded Medicaid program.

Wal-Mart would rather pay the $3,500 penalty than pay $12,000 to $18,000 dollars a year healthcare insurance premium for their employees.

There are many other companies that are going to follow suit such as McDonald’s, Burger-King and thousands of others that got waivers from President Obama for Mini-Med healthcare coverage.

“Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan, which is one of the problems with the way the law is structured,” said Ken Jacobs, chairman of the Labor Research Center at the University of California, Berkeley.

“Medicaid Expansion” is a big joke. The uninsured workers will increase from 31 million to some higher number when companies drop healthcare insurance coverage and pay the penalty.

“The Supreme Court ruled earlier this year that the decision to expand the Medicaid program is voluntary for the states.  At least eight states , including Texas, have said they  will not expand the program ,’ 

At present before “Medicaid Expansion” the entire Medicaid program is unaffordable. Medicaid cost will now escalate. President Obama will not be able to afford to keep his promise to the poor.

States realized President Obama has set them up to get stuck with the increased Medicaid cost. States are not signing up for the “Medicaid Expansion“ even though they would like the matching federal funds.

The nation’s governors were told,

States that don't expand their Medicaid rolls to include residents at 133% of the federal poverty level won't get 100% of the matching federal funds made available under the Patient Protection and Affordable Care Act (Obamacare).

The unintended consequence of large employers and corporations not covering their employees with healthcare insurance is escalating.

Who is going to qualify for Medicaid? Who will get stuck being uninsured?

The poor people earning an annual income of less than 133% Federal Poverty Level will qualify for Medicaid coverage. 

Anyone earning a penny more than the Federal Poverty Level will be rejected and not qualify to receive Medicaid coverage.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.


















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