The Human Face of Medicaid’s Poverty Trap
NCPA has long recommended a universal, refundable tax credit to replace welfare programs that impose effectively high marginal income tax rates on their dependents. A story from Chicago shows the human cost of Medicaid’s poverty trap:
McDonald’s grill cook Douglas Hunter is literally the poster child for a $15 minimum wage: The Chicago man’s picture and story are featured in the “Fight for $15” national campaign.
Hunter’s minimum pay goes to $10 an hour in July, but a steep pay raise would bring unintended consequences for Hunter, a diabetic with multiple medical conditions whose care is covered by Cook County’s program for the uninsured and poor.
So any salary gains could be wiped out by the price of his medications and supplies, including two kinds of insulin at $403 a month and drugs to control high cholesterol and blood pressure that add an extra $330 a month.
And that’s not including the syringes, health checkups and eyeglasses he receives for free, allowing him to avoid choosing between maintaining his health and providing for his teenager.
At $15, he figures he’d need to reduce his total work hours to ensure his new income didn’t disqualify him from his current benefits. (Don Lee, “For this McDonald’s cook, wage hike could do more harm than help,” Los Angeles Times, June 1, 2015)
Other factors could hurt Douglas Hunter if a nationwide minimum wage of $15 is enacted. He could lose his job when his employer has to raise his pay and then realizes it can attract more qualified people with a higher wage. Or maybe it becomes feasible to automate his job now once labor costs have doubled. Or maybe the restaurant has to raise prices and demand drops off resulting in a layoff. There doesn’t appear to be an upside for Mr. Hunter.
If they can create a robot to make 2000 recipes, they can make a robot to flip burgers. Ask the buggy whip manufacturers, typewriter repairmen, telephone operators and bank tellers how guaranteed ones job is. There’s a larger, macro economic structural shift in play that’s greater than this high school drop outs multiple co-morbidity hourly wage problem. Harsh but true.
And for those of you looking for a long term career as a McDonald’s bovine patty flipper, please do not read this Reuters story “Chimps have mental skills to cook: study”. Of course, banana based salaries will shoot banana daiquiri prices through the roof but the economy is ever devolving.
If Mr Hunter is actually on Medicaid ( as opposed to a special Illinois program for the poor), his income cannot rise above $15,415 a year or he will in fact be kicked off Medicaid.
In the neighboring state of Wisconsin, persons like him are given tax credits and sent to the Federal exchanges. There they get a policy which ( in many cases) has deductibles and co-pays which they cannot afford.
There is a solution. Medicaid in a few states has a program for persons whose income is too high for eligibility, but whose medical bills are a sizable per cent of their income.
This would be the decent and merciful thing to do.
Will it make Medicaid cost a little more? Probably.
That will not kill us.