Some big firms back expansion of state Medicaid

— Some large businesses in Arkansas that pay low wages are publicly supporting Medicaid expansion, citing worries that federal penalties or the high cost of providing affordable coverage will put them in the red or shut them down completely if the state doesn’t enlarge Medicaid rolls by 250,000 people.

“We really and truly hope that Medicaid expansion goes through. If not, we’re in deep trouble,” said Marty Cantwell, a general manager for Marty Mart stores, a chain of 16 convenience stores, mostly in the Delta.

Marty Mart employs about 200 workers, only 54 of whom earn more than 138 percent of the poverty level, or $15,415 a year.

If the state doesn’t expand Medicaid up to 138 percent of poverty as allowed under the Affordable Care Act, the company faces a fiscal dilemma:

The company could offer insurance to all of its employees - and they all buy it - to the tune of about $882,000.

The company could not offer insurance and let its eligible employees purchase coverage on the state’s health insurance exchange. Under the new health-care law, that would cost roughly $332,000 because the federal government would fine the company $2,000 per employee (with the first 30 workers exempted).

Those options don’t sound good to Cantwell. In fact, they might put his company out of business, he said.

“We can’t stand that much of a lick. It’s just going to pound us,” said Cantwell.

But if Medicaid expansion does happen, the price tag for Marty Marts drops to around $243,000 because it would only have to offer coverage to those 54 employees who earn more than 138 percent of poverty. And his company could take a business-income tax deduction on that coverage.

Partial expansion up to the poverty level - some-thing the federal government is considering at the request of Gov. Mike Beebe - wouldn’t help a company with 50 or more employees such as Marty Mart. The bulk of the company’s workers are full time.

“Partial expansion is not going to help [Marty Mart],” said Mark Meadors, vice president at Bancorp South Insurance Services Inc.

Meadors ran the numbers for Marty Mart last fall. While small businesses with fewer than 50 employees are exempt from fines and don’t have to offer health coverage for their employees, larger firms aren’t.

That cutoff in the law has larger companies frantically running the numbers on whether expansion is a good deal, Meadors said.

“I looked at the numbers and said to myself, ‘Holy Cow,’ ” said Meadors, a self described conservative. “Everything that has been written about expansion has focused on the individual or small business. It’s not taken into account what the impact is for large businesses.”

Another Arkansas employer that spoke out was CareLink, a North Little Rock nonprofit that employs about 650 home health-care workers, many of whom would be eligible for Medicaid under expansion.

“It’s the right thing to do,” said Elaine Eubank, CareLink’s CEO and president. “As an employer, it’s hard to offer something that meets the test in the law of ‘affordable’ [coverage].”

The Arkansas Hospitality Association, which has 1,200 members and represents restaurants, fast-food operators, hotels, motels and other tourism-related businesses, doesn’t have a position on Medicaid expansion. It’s still in fact-gathering mode, said Montine McNulty, the group’s executive director.

“Everyone is scurrying to see what does it mean for me and how does it affect me?” McNulty said. “There are still a lot of unknowns out there. It’s really hard to take a position.”

The state Chamber of Commerce hasn’t taken a stand on Medicaid expansion either.

Sen. Jonathan Dismang, a Searcy Republican whose district includes some Marty Mart stores, said he has yet to hear from a single employer - let alone one with 50 or more employers - who supports expansion.

But allowing large businesses to offload insurance costs onto the government tab doesn’t pass the smell test, he said.

“To shift that burden so that it falls on taxpayers? I’m not sure that’s a really strong argument,” Dismang said.

Large companies will be watching Arkansas to see whether coverage will be available for their low-earning workers, said Matt DeCample, Beebe’s spokesman. Dismang’s contention that it amounts to a cost shift onto state budgets and taxpayer wallets “is a valid argument,” he said, “but it’s an argument that we’ve moved past with the Supreme Court decision.”

The U.S. Supreme Court last year upheld most of the Affordable Care Act but gave states the option of whether to expand their Medicaid programs. In Arkansas, which already covers about 780,000 people in its $5 billion program, the issue has been deemed by lawmakers in both parties as perhaps the most important to reach the Legislature in many years.

If Arkansas doesn’t expand Medicaid, DeCample said, it places the state at a “competitive disadvantage.”

“I would think in general that business likes to locate in states where they have more options available to them for health-care or more affordable options,” DeCample said.

McNulty said her members are voicing similar questions.

“What happens if half the states expand and half don’t? That matters to our members who have businesses in several states,” McNulty said.

Many large-scale, low wage employers or their trade groups didn’t respond to requests for comment. Wal-Mart Stores Inc., which would not confirm that it has employees who would be covered by expansion, did comment.

“The company does not have a point of view. Our focus is on providing affordable, comprehensive health insurance to our associates,” said Randy Hargrove, a Wal-Mart spokesman.

Sen. David Sanders, a Little Rock Republican, said businesses will always “save money within the parameters that government gives them.”

“Policy impacts behavior,” Sanders said. “As a policymaker, I have to look at that. And I have to think, ‘How does it affect the state budget, the taxpayer?’”

On Monday, Beebe stumped for expansion at a meeting of the Arkansas County Judges Association in North Little Rock.

“You need to educate yourselves on this,” Beebe told the county judges. “I don’t care if you’re a Republican, a Democrat or an Independent. I don’t care if you are for Obamacare or against Obamacare. None of that makes any difference. This is just a function of using your common sense and adding up dollars and cents.”

Cantwell, the general manager of the convenience store chain, said he probably wouldn’t have been in favor of expansion if it didn’t have the potential to wreak havoc on his company’s finances.

“In the long run, I think,it’ll be good,” he said.

Information for this article was contributed by Sarah D. Wire of the Arkansas Democrat-Gazette.

Front Section, Pages 1 on 02/12/2013

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