Employers Who Dump Workers onto Medicaid: The New 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.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

John R. Graham is a Senior Fellow at the Independent Institute.
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