Congress Probes $200 Million Annual Union Medicaid Scam

To organized labor, they’re called dues payments. To some members of Congress, they’re called acts of theft. The critics may be right. During the past several weeks, the Senate Committee on Homeland Security and Government Affairs has been conducting oversight on why Medicaid, a program now consuming well over a half-trillion dollars a year in federal and state taxes, is costing so much. One reason is that unions now skim an estimated $200 million a year from the program, having been granted the authority by more than a dozen states to reclassify home health care workers, including family caregivers, as government employees. This practice undermines statutory intent and a Supreme Court ruling four years ago. Sen. Ron Johnson, R-Wisc., for one, is demanding some answers from the Department of Health and Human Services.

Medicaid is by far the nation’s largest means-tested anti-poverty program. Passed by Congress and signed by President Lyndon Johnson in 1965, it is designed to defray acute and long-term medical bills of low-income and disabled persons. Administered by the states, the program guarantees a federal contribution of at least 50 percent of a state’s total costs through a formula based on per capita income. Medicaid now enrolls about 66 million people, or roughly 20 percent of the U.S. resident population. From less than $1 billion during its launch year, total fiscal year program spending (including administrative costs) rose to $210 billion in 2000, $429 billion in 2012 and $574 billion in 2016. The Medicaid provisions of the Obamacare legislation of 2010 virtually ensure costlier subsidies in the future. The program is especially a bonanza for organizations – such as public-sector unions – skilled in navigating the political system to their own advantage.

Union Corruption Update previously has analyzed union Medicaid dues-skimming in Illinois (here and here) and Minnesota (here). The case of Illinois is especially significant because it was the origin of a lawsuit that eventually made its way to the U.S. Supreme Court. In June 2014, the Court ruled in Harris v. Quinn by a 5-4 margin that nonunion private-sector home health workers cannot be required to support a public-sector union simply because some or all of their wages are derived from state Medicaid funds. The class-action suit originated in 2010 when several home care providers, led by a caregiver, Pamela Harris, sued the State of Illinois and two unions, the Service Employees International Union (SEIU) and the American Federation of State, County and Municipal Employees (AFSCME). The state, through separate executive orders issued in 2003 and 2009, had classified such providers as “state employees” so as to render them captive to union representation. A well-connected Service Employees affiliate, SEIU Healthcare Illinois & Indiana, now fills its coffers with an extra $10 million a year thanks to the 2003 order. With the State of Illinois serving as dues collector, the union has a trusted ally.

Harris v. Quinn should have ended this power grab, but it did not. Because the decision did not invalidate public-sector monopoly bargaining itself (i.e., did not overturn its 1977 Abood decision), unions and their political allies still hold the upper hand. Indeed 13 states – California, Connecticut, Illinois, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New York, Oregon, Rhode Island, Vermont and Washington (each, save for Missouri, without a Right to Work law) – give unions carte blanche to force home health care providers into public-sector bargaining agreements. And it’s costing taxpayers. According to the Arlington, Va.-based State Policy Network, SEIU and AFSCME now skim a combined $200 million a year from state Medicaid programs, a sum that does not even include the $50 million that these unions now get from Temporary Assistance for Needy Families child care. Aside from diverting money from the those in need, this practice undermines the statutory purpose of Medicaid. And unions are making it as difficult as possible for a provider to opt out of forced dues payments. In Oregon, for example, caregivers have only a 15-day period in a given year from which to exit SEIU Local 503, the state-certified collective bargaining agent.

The Supreme Court is now reviewing the constitutional basis for public-sector monopoly representation. The test case before the Court, Janus v. AFSCME, is expected yield a ruling sometime by the end of this June. If the Court sides with the plaintiff, Mark Janus, a dissenting Illinois state employee, it would jeopardize the ability of organized labor to convert Medicaid funds to union agency fees. No matter which way the decision goes, at least a few members of Congress aren’t waiting. Led by Rep. Cathy McMorris Rodgers, R-Wash., and Sen. Ron Johnson, R-Wisc., they are insisting that Medicaid-derived dues payments be a function of individual worker consent.

Rep. Rodgers this January announced her intent to introduce legislation to end the practice of dues-skimming. Under her proposal, unions still could represent caregivers in states where the practice exists, but would have to collect dues on their own. In other words, states no longer would be able to serve as collection agents for unions. For her, the issue is highly personal. Her son was born in 2007 with Down syndrome. “This is robbing our nation’s most vulnerable who need Medicaid the most,” she said at the time. “Every dollar that is diverted from a caregiver to a union hurts that family’s ability to care for their loved ones. Paying unions is not what Medicaid was designed for.”

Senator Johnson likewise believes that controlling Medicaid costs requires barring states from serving as union business partners. In an April 30 letter to Seema Verma, administrator for the Centers for Medicare & Medicaid Services (CMS), part of the U.S. Department of Health and Human Services, he wrote, “I respectfully encourage CMS to review this practice and determine whether changes to law or regulation are necessary to ensure that Medicaid funds are provided to the program’s intended beneficiaries.” The senator specifically requested: 1) an explanation as to what actions CMS is taking to prevent states from skimming dues from Medicaid payments without the consent of service providers; 2) the amount of Medicaid funds intended for home care workers that states have diverted to union dues for each fiscal year starting with 2009; and 3) all relevant legal memoranda, guidance documents and other written material.

Federal legislation to rein in this insidious brand of forced unionism cannot come too soon. Public-employee unions, despite their moniker, are not public-spirited in outlook. First and foremost, they protect their own interests. And because they are dependent upon government largesse, they inevitably devote large sums of time and money to political campaigning and lobbying intended to expand the reach of government. SEIU Local 2015, one of two unions certified to represent home caregivers in California, for example, spends around 60 percent of its dues collections on political and other activity unrelated to representation. Indeed, there are about 300,000 caregivers in the state who, whether they realize it or not, are having hundreds of dollars a year taken off the top from their paychecks to fund union activism. Caregivers and their patients in other states also deserve better.