Maryland, Walmart, and Medicaid

Ezra flushes out why targeting Walmart to pay more for health care doesn't fit:

Putting aside questions about the utility of entrenching the corporate welfare state, Wal-Mart simply does not abuse Medicaid. The retail sector as a whole sees an average six percent of its employees relying on Medicaid; Wal-Mart averages five percent. As for the children of employees, who do rely disproportionately on state services (though for perfectly good reasons), kids of Wal-Mart employees use government health care 27 percent of the time; for the retail sector as a whole, that number is 36 percent.

So not only is Walmart not causing a Medicaid problem, but Maryland doesn't have a Medicaid problem. (It does have a wage problem, however) Its growth in Medicaid spending from 1991-2001 is actually 1% under the national average. The state isn't struggling more than others under the weight of health spending.

It seems as though Maryland has come up with a very clever way to get more money in its Medicaid bank. Walmart is a favorite punching bag for the left and the myth that Walmart sends a large chunk of its employees to Medicaid is obviously still afloat. Maryland legislators are riding that wave.

If we're trying to "fix" health care, to reduce the number of uninsured, we need much broader solutions than demanding large companies demanding 8% of payroll to health insurance. That's partly because large companies usually offer insurance, while a number of small businesses don't. But rather than thinking about acutal reform, states are using political capital to kill off one or two bad guys. But this legislation could pass because it's not that intrusive. Wal-Mart claims it already spends near 8% on health care. If legislators really wanted to decrease the number of uninsured, they should have said, "You must provide insurance to 2/3 of your employees".

In terms of a viable solution for health care, this is just running in circles.

Comments

[Martin]

Kate,

I dug a little bit further into the Kaiser data on Maryland Medicaid that you had linked to and I found some of the statistics quite troubling. You are right that MD spending growth has been less than that for the rest of the U.S., but there other disturbing trends that total spending misses. In particular, MD has particularly tight enrollment criteria for non-pregnanat parents (32 and 39% of FPL by non-working, working status), though they are quite generous for pregnant women. In addition, it looks like the cost per enrollee is substantially higher for MD medicaid than the national average. Overall this suggests that while Wal-Mart employees might not be on state Medicaid rolls (b/c they pay too much), the fact that their employees are uninsured will still have a substantial impact on state, Federal and private spending for health care in MD becuase of the implicit and explicit cross-subsidies that are used to provide some compensation for uncompensated care. I'm not necessarily disagreeing with your position, but I, for one, need to see a stronger argument before I will agree that MD doesn't have a Medicaid problem--also, look at the cost containment measures the MD has in place, they are non-trivial and would lead to lower growth in Medicaid spending without refuting the belief that there might be a Medicaid problem. Lastly, how many other line items in state budgets are growing at double-digits? It could be the case that ALL the states are having Medicaid problems.

[Tom Quigley]

Have you read Paul Zane Pilzer's book yet?

[Martin]

Tom, I haven't read it, but looking at the description on Amazon suggests that it might (and might not) work. If you look at the history of efforts to provide universal health insurance coverage, all of the post-war efforts that targeted all age groups failed and, in fact, had no chance of passage unless they were, like Nixon's plan, built on the foundation of employer-provided insurance. Also, Pilzer endorses HSAs, which are an interesting solution but creates certain particular problems. The biggest issue is how do you set the initial deductible? This seems like a trivial issue, but to avoid creating a system that is functionally prepayment you need the deductible to be well above what the typically patient spends in a year. This is covered quite well in Starr's The Social Transformation of American Medicine.

[Hellmut Lotz]

I am wondering what would happen if one compared Walmart not to the retail sector in general but to similar sized competitors. Shopper's Foodwarehouse and Costco are unionized. Hence I find it implausible that Walmart provides health care benefits at the same level. What are the controls in the model?

[Kate]

Martin,

You're right -- I shouldn't have said Maryland doesn't have a Medicaid problem. All states have a Medicaid problem right now. What I mean is that Maryland doesn't appear to have any more problems with Medicaid than other states, and in any case Wal-mart isn't single-handedly causing them.

Hellmut, Ezra handily compiled the data you're looking for here: http://ezraklein.typepad.com/blog/2006/01/walmart_and_hea.html The graphs are a really interesting comparison so definitely check them out. Basically Walmart is a little lower on the number insured compared to other retailers.

Obviously unionzed businesses have better benefits -- Walmart is essentially impossible to unionize, so their wages and benefits will be much lower than places like Costco.

[Hellmut Lotz]

Obviously unionzed businesses have better benefits -- Walmart is essentially impossible to unionize, so their wages and benefits will be much lower than places like Costco.

That's what the bill is about. Defining a minimum level of benefits makes sense. As benefits evaporate under the pressure of competition the taxpayer would have to subsidize the retail labor force.

The bill is an obstacle against degenerating health care conditions.

[Neil the Ethical Werewolf]

Just wondering if you've seen Max Sawicky's response. One of his points is that the retail sector in general is a Medicare abuser.

There is, of course, Ezra's political point about using this to nudge Wal-Mart into supporting national health care, which I'm not qualified to have an opinion on.

[Neil the Ethical Werewolf]

Oops that should be "Medicaid abuser". I am manifestly not among the wise.

[Half Sigma]

I think the notion is absurd that health care should be provided as part of your job.

What's next? Your employee has to also provide you a place to live and three meals a day?

This is a free market, your employer is supposed to give you money and you're supposed to buy with the money what you need.

Why can't people buy health insurance like everything else? (Well, the system the way it is set up now discriminates HEAVILY against the person trying to buy his own health insurance. That's the problem.)

[Neil the Ethical Werewolf]

If people try to buy it as individuals, Half Sigma, adverse selection goes out of control and nobody can afford it.