The feds can put an end to the Medicaid dues skim

In recent years, 11 states have diverted Medicaid funds meant for some of the nation’s most vulnerable citizens to union interests. The Centers for Medicare & Medicaid Services is now proposing a rule change that would prohibit such payments — “dues skims” — and the change could not come soon enough.

The Social Security Act says that only health care providers or beneficiaries may receive Medicaid payments, with four very specific exceptions. The Obama administration added an exception to explicitly allow Medicaid dollars to flow from home care providers, who help persons with disabilities, to labor unions, without the consent of either Medicaid beneficiaries or their providers. While some states had already engaged in dues skimming, the administration made it easier for states to implement this scheme.

{mosads}As organized labor has continued to lose membership in the private sector, it has looked for new members and dues elsewhere. Home-based health care providers, who receive some or all of their compensation through state assistance programs, represented an opportunity. In fact, home care workers have served as a lifeline for organized labor, contributing significantly to some unions’ gains in membership. In 1999, for example, the SEIU organized 74,000 home care workers in Los Angeles, and 49,000 home-based child care providers in Illinois were added to union rolls in 2005.

In Michigan, 41,000 home health care providers were roped into union membership in 2005 and had dues skimmed from the Medicaid payments they received on behalf of their clients. The SEIU forced home-based caregivers into its affiliate union shop, SEIU Healthcare Michigan. The state established an entity, the Michigan Quality Community Care Council, to serve as an employer of record for these at-home providers, who continued to work at the discretion of their clients. The Council did not have any authority over Medicaid payments or the working conditions of home care providers, but it allegedly bargained with the union, and made the dues skim possible.

Between 2006 and early 2013, SEIU Healthcare Michigan siphoned away $6 million per year in Medicaid payments. The Legislature periodically increased the amount of Medicaid checks to home care providers, which allowed the union to claim that it successfully bargained for wage increases. Ultimately, the skim took $34 million from home care providers and placed it in union coffers.

After this was exposed by the Mackinac Center and others, legislators became more interested in shutting it down. This prompted union advocates and allies to attempt to enshrine this dues skim in the Michigan constitution via the state ballot. In the November 2012 election, the public rejected the idea by a vote of 56-44 percent. Gov. Rick Snyder and the Michigan Legislature eventually ended this racket in February 2013.

Michigan’s experience shows that most home care providers do not approve of being forced into a union. According to a report by the U.S. Department of Labor, membership in SEIU Healthcare Michigan fell from 55,265 in 2012, when dues skim was still in practice, to 10,918 in 2013, following its repeal. The drastic decrease represents nearly all the long-term, home-based caregivers affected by the dues skim. Those individuals who remained in SEIU Healthcare Michigan are employed at private medical facilities.

Robert and Patricia Haynes of Macomb Township are an example of home care providers who did not appreciate seeing their much-needed reimbursement money from Medicaid being taken from their paychecks and given to a union, against their will. The couple received Medicaid payments for the care they provided to their two adult children who have cerebral palsy. “We are not anti-union,” Patricia told Fox News, following the Mackinac Center’s Michigan Capitol Confidential story about their plight. “I just don’t understand why we were forced to join because I have two disabled kids.”

While some states still permit dues skimming of Medicaid payments to home care providers, this practice is unethical and must be reformed. These arrangements classify private caregivers as public employees for the sole purpose of extracting dues from their state aid payments. This happens even though the alleged government employer does not hire, fire, or supervise home health-care providers, who largely consist of family or friends of Medicaid beneficiaries.

Payments to home care providers and Medicaid beneficiaries should not be diverted to a third party without the consent of the beneficiaries. CMS should implement the rule change, which should clearly prohibit Medicaid funds from being diverted to unions and their affiliates. Doing so will honor the taxpayers, the purpose of labor law and, most importantly, the needy who are served by home care workers.

Lindsay Boyd Killen is the vice president for strategic outreach and communications at the Mackinac Center for Public Policy, where John R. LaPlante is a contributing editor and senior fellow.