Walmart announced today that as of the beginning of next year it will be dropping health insurance for 30,000 employees who work less than 30 hours per week. Many liberals will react to the news by saying that it’s just a profit-hungry corporation once again screwing over its employees. Conservatives are likely to say that this just shows what a mess Obamacare has created and why it should be repealed (and replaced with the Republican alternative, which by now should be known as GodotCare, since people keep talking about it and it never shows up).
But the truth is that this development is actually a good thing, and it shows that the Affordable Care Act is working.
Walmart isn’t the first to take this step. Other large retailers that had been offering coverage to part-timers, including Target, Home Depot, and Trader Joe’s, have dropped it as well. In some cases it was because the plans were “mini-med” insurance that covered little if anything, and were no longer permitted under the ACA’s new rules. But Trader Joe’s made the change because they calculated that with subsidies, their part-time employees could actually get more affordable insurance through an ACA exchange than through the company (and they gave them an extra $500 to ease the transition).
So why is this a good thing? It may involve some hassle for individual employees, as they’ll have to go to the exchange to figure out what plan to get. But most of those Walmart workers will likely come out ahead. Someone who’s earning $9 an hour working 30 hours a week at a Walmart would be making $13,500 a year. Depending on what their spouse makes and what state they’re in, they could be eligible for Medicaid and pay nothing at all for insurance, or get substantial subsidies that would make a private plan extremely affordable.
Even more significant over the long term is the fact that the more companies do this, the farther we move away from the system of employer-provided health coverage. That system is an accident of history that serves neither employees nor employers very well.
“If one calculates the hourly wage-equivalent of decent family health insurance coverage, it’s not realistic to expect employers to provide this coverage to relatively part-time, relatively low-wage workers,” public policy expert Harold Pollack of the University of Chicago told me. “The sooner we recognize this rather basic reality, the sooner we can design sensible health and labor-market policies.”
The most important thing the ACA did was provide health security for everyone. Whether you have coverage is no longer dependent on the generosity of your employer, and if you lose your job, change jobs, or set out to start your own business, you can still get covered even if you have pre-existing conditions. Now that everyone can get insurance through the government (if you’re eligible for Medicaid) or through an exchange, there’s no reason to keep the middleman of the employer.
I’m not saying Walmart should get a medal or anything — they’re just trying to maximize their profits. But this is a development that we should welcome.