Scott MacKay Commentary: Are Some Businesses Freeloading On Medicaid?

May 11, 2018

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Health care costs for poor residents keep increasing in Rhode Island and Massachusetts. RIPR political analyst Scott MacKay wonders if one of these state governments is giving some businesses a free ride.

From Providence to Pasadena, a national debate has erupted over government programs for the poor. The stereotype is that these folks are lazy, freeloading on hard-working taxpayers. There are even proposals to drug-test recipients of food stamps and Medicaid, the government program that provides health care to those who can’t afford private insurance.

No serious lawmaker ever seems to propose drug-testing bankers who took taxpayer bail outs, or corporate farmers living large on federal crop support payments. That’s because it’s easy to demonize the poor, who don’t have fancy lobbyists or write  campaign checks to politicians.

But when it comes to Medicaid in Rhode Island, it appears some big companies are getting away with sloughing off some of their employee health care costs on the taxpayers. An egregious example: State data shows that five companies that all collect job-development tax credits from the state also have about 360 employees on taxpayer-financed state health care programs.

The companies are Citizens Bank, CVS Health, submarine builder Electric Boat, software developer Rite-Solutions, and United Natural Foods. Their  workers cost the government about $2.3 million a year for  their Medicaid costs in 2017.

CVS, with 163 workers on Medicaid, is the largest of these firms; its workers cost more than $1 million to insure.

There are likely many more companies whose employees are getting their health care from the taxpayers. But state government doesn’t know which companies they are. That’s because the state hasn’t been collecting this data.

That’s the case even though there is a state law requiring that the state Department of Human Services report this information to the General Assembly every year. But it hasn’t been done since 2009, when Gov. Donald Carcieri was in office.

So once again, Rhode Island government is ignoring its own law. This is another blemish on state government, which was recently found by Rhode Island Public Radio to be neglecting to study whether tax subsidies to business are effective. This, too, is required by law.

State Sen. Lou DiPalma, a Middletown Democrat, has been after Gov. Gina Raimondo’s administration to come up with the data. For far too long, the Assembly has made decisions based more on assertion and anecdote rather than specifics and data. This attitude is what gave us Curt Schilling’s 38 Studios fiasco.

Raimondo’s administration says the Medicaid data  is difficult to put together. According to a Human Services spokeswoman, the administration is “working towards better sharing this information with the public.”

The worst element about poverty in our state and nation is that too many workers in retailing and fast food businesses earn so little that they qualify for government paid health care and other taxpayer subsidized benefits.  In 2009, the last time Rhode Island reported these numbers, WalMart had more than 2,000 employees on Medicaid.

As if often the case, Massachusetts government is doing a better job of keeping track of these companies and getting them to pay their fair share for employees who get government –paid health care.

Republican Gov. Charlie Baker worked with the legislature to put into effect new fees on businesses whose employees use state Medicaid health care. Employers with six or more workers are assessed fees of up to $750 a year on such employees.

This seems only fair. While business lobbies initially criticized such fees, Baker and lawmakers forged a compromise to reduce them and established the $750 per worker limit. The booming Boston area economy doesn’t seem to be affected by such fees.

The contrast with Rhode Island is striking. Democratic Gov. Gina Raimondo loves to boast about new construction in Providence and low-unemployment. But she and her administration are walking in the dark when it comes to taxpayer costs.

Since 2008, figures for some state programs show Rhode Island had handed out nearly $350 million in tax breaks to companies. Are these good investments or just more corporate welfare? It’s beyond ridiculous that we have no way of knowing the difference.

Scott MacKay’s commentary can be heard every Monday morning at 6:45 and 8:45 and at 5:44 in the afternoon. You can also follow his political analysis and reporting at our “On Politics” blog at RIPR.org