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June 5, 2013
Guest Opinion: Yes, the state should close 'loophole' in health care law

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(June 5 -- By Jimmy Gomez, Special to The Bee)

The federal health care reform law, the Affordable Care Act, holds the promise of bringing potentially lifesaving coverage to millions of Californians if we all live up to our shared responsibility - individuals, government and businesses.

Under the ACA, individuals must have health care coverage through either their employer, the private market or subsidized government programs. The government provides subsidies through the new health care exchange to help individuals and businesses afford coverage. Businesses of 50 or more full-time employees must provide affordable coverage or pay a penalty to offset a portion of the taxpayer cost.

Unfortunately, a small number of large corporations are skirting their responsibility to provide health care or pay a penalty by cutting hours and wages so low that workers end up on taxpayer-funded Medi-Cal.

Why Medi-Cal? Because on Medi-Cal there is currently no penalty or cost to the employers.

Due to this loophole in the ACA, these big companies can avoid paying their fair share, and taxpayers pick up the tab instead.

This loophole will have devastating consequences on the state budget if it is not closed.

Already, there are 250,000 workers for large companies on the taxpayer-funded Medi-Cal program, according to new research by the UC Berkeley Center for Labor Research and Education.

The research shows that if the loophole isn't addressed, that number will balloon to nearly 400,000 by 2019.

In other words, taxpayers will be on the hook to pay for an additional 150,000 workers of some of California's largest and most profitable corporations. That's unsustainable and unfair.

Low Medi-Cal reimbursement rates for providers already have led to dangerous physician shortages in rural and urban communities - from Fresno and Merced to Los Angeles and San Francisco. And the shortage is expected to grow as we fully implement the law.

In the end, it is taxpayers who will pay. Medi-Cal patients who can't find a primary care doctor seek preventive and other non-urgent care at emergency rooms, further straining threadbare state and county budgets.

The loophole will cause Medi-Cal costs to eat away at funding for priorities like education, infrastructure, public safety and job creation programs. Every community will be affected.

I've authored Assembly Bill 880, which would protect taxpayers and our vital programs by closing this loophole. My bill would assess a responsibility charge on only those large employers that dump workers onto Medi-Cal and taxpayers. The charge would be roughly equal to the cost of a commercial health care plan for an employee. The bill applies only to large companies that employ 500 or more workers. It exempts small and midsize businesses.

The funds raised by the charge will help pay a share of Medi-Cal costs for workers, increasing the reimbursement rate for providers and shoring up the safety net for Californians who need care.

The bill doesn't punish well-intentioned businesses just trying to stay afloat. This bill demands that a small number of large companies that are trying to game the system pay their fair share and quit reaching into our wallets.

It's important to note that only a sliver of businesses would be affected at all by this law. Because of the 500-employee threshold, the law only applies to less than 1 percent of California businesses. And only a small number of businesses with more than 500 employees are trying to force taxpayers to foot the bill for their own health care costs.

Some special-interest lobby groups representing big companies are using scare tactics about the legislation's impact on jobs in an effort to keep the taxpayer-supported loophole open. But upon close examination, the threat of job loss doesn't hold up.

Research shows that many of the companies trying to avoid their responsibilities under the law are mega-corporations in the retail and restaurant industries. Asking Wal-Mart or Darden Restaurants (the owners of Olive Garden and Red Lobster) to pay their fair share won't bankrupt them.

Wal-Mart generated $444 billion in revenue last year, and its CEO rakes in $28 million a year. Wal-Mart can afford to pay a portion of health care costs so that those costs are not absorbed by taxpayers.

The question we must ask is: Should big companies pay their fair share, or should the costs of their employees' health care be dumped onto taxpayers?

My bill is a common-sense solution to a growing problem. California should lead the nation in closing this loophole to protect taxpayers and funding for our schools, public safety and jobs. If a few big corporations are allowed to avoid their responsibilities under the new health care law, we all pay the price.

The last thing our economy and our communities need is more cuts to schools, infrastructure and public safety. You and I as taxpayers should not be forced to subsidize health care for giant companies that can easily afford it.

It's time to close this health care loophole by passing AB 880 so taxpayers, still struggling with the recession, aren't on the hook for millions of dollars in new costs every year.

Jimmy Gomez, D-Los Angeles, represents the 51st Assembly District in the California Legislature.

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