How low-wage Walmart workers may benefit from company no longer offering insurance to part-timers | Arkansas Blog

Tuesday, October 7, 2014

How low-wage Walmart workers may benefit from company no longer offering insurance to part-timers

Posted By on Tue, Oct 7, 2014 at 5:29 PM

Just a quick addendum to Leslie's post on Walmart ending health insurance benefits to part-time workers. 

In many cases, low-wage workers may actually be better off because of Walmart dropping health insurance coverage. That's because they can only get subsidies to buy Obamacare plans if they don't get offered employer-sponsored insurance. Lower-income people get more generous subsidies, so in many cases, workers will get better deals — sometimes dramatically so — via Obamacare plans as opposed to the Walmart-offered plans. Sarah Kliff over at Vox explains the details

Meanwhile, economists have generally found that benefits come out of wages, and reducing benefits leads to higher wages. So a low-wage worker might be able to get cheaper insurance via Obamacare subsidies AND potentially see moderately higher wages as a result. Will Walmart actually raise wages? We'll see, but in the long term, in the Obamacare world, low-wage workers are almost certainly going to be better off without employer-sponsored health insurance, with higher wages and subsidized health insurance on the Obamacare marketplaces. (Note: none of this changes the fact that Walmart's maneuvering on all of this looks pretty squirrelly). 

The loser in the Walmart scenario is the federal taxpayer, picking up the tab instead of Walmart. Still, for anyone who would like to see health insurance decoupled from the workplace, this is an example of how Obamacare may inch us in that direction. I'd also argue that this is an example of why the oft-delayed employer mandate doesn't really make sense. In practice, by requiring large employers to offer health insurance or face a penalty, it would lock in many lower-income workers to employer-sponsored insurance that isn't the best deal for them, and would potentially depress their wages. Yes, it saves the federal government some money, but it's also politically toxic and props up an employer-sponsored health insurance regime that drives up health care costs overall. 

There's one exception to this happy story for low-wage workers at Walmart: for those below the poverty line in states which refused Medicaid expansion, they'll fall in to the coverage gap and be left with no options. Many part-time Walmart workers will be above the line, but some will not. Many of these folks may not have been able to afford the Walmart insurance to begin with, so this won't change anything — in refusnik states, many of the poor simply have no options for affordable health insurance. Fortunately Arkansas expanded coverage via the private option.  

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