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REPORT: Health Coverage Remains Out of Reach for Millions of Low-Wage Workers

January 6, 2016

Companies that employ low-wage workers are increasingly cutting worker hours, using independent contractors, and exploiting other methods of getting around the Affordable Care Act‘s employer-insurance mandate, a December 28 USA Today report found.

These practices are particularly harmful to low-income workers in the 20 states that have chosen not to expand Medicaid, the report says.

As many as five million working poor are “caught in a health care netherworld,” priced out of coverage through health insurance exchanges, denied access to Medicaid, and shut out of employer-sponsored coverage, USA Today reporters Jayne O’Donnell and Laura Ungar write.

Hundreds of thousands of those workers are direct-care workers, as reported in the 2015 PHI study, Too Sick to Care, which focuses specifically on workers living in states that have not expanded Medicaid.

Avoiding the Mandate

The USA Today report says that up to 20 percent of businesses have either cut workers’ hours, or plan to do so, in order to avoid the insurance mandate.

Bill Redfern, owner of the home care agency iCare, told O’Donnell and Ungar that his franchisees would like to give workers full-time hours and health coverage, but “that’s like handcuffs…. If you want to be competitive, you can’t be cutting into your margins.”

A 2012 report from Franchise Business Review, a market research firm, shows that home health care places in the top-five most profitable franchised businesses in the country, with profit margins as high as 40 percent.

Additionally, O’Donnell and Ungar present evidence suggesting that both private and public employers are increasingly using labor provided by independent contractors to get around paying for insurance. Under the Affordable Care Act, only full-fledged employees are required to receive insurance from their employers.

In December, the National Employment Law Project issued a report showing that home care workers are particularly vulnerable to being misclassified as independent contractors, and thus denied employer-sponsored coverage.

— by Matthew Ozga

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