In Four Years, Taxpayers Spent $18-Million On Medicaid Assistance For Workers at Rhode Island Companies Receiving Millions in Economic Development Tax ‘Incentives’

Between the state’s 2014 and 2017 fiscal years, Rhode Island allocated $18-million through its Medicaid-funded Rite Care and Rite Share medical assistance programs to employees working at companies that simultaneously received more than $114-million in state subsidies designed to spur job growth and workforce development.

CVS Health topped the list for total Rite Care and Rite Share expenses, as well as total tax incentives received. According to Rhode Island Unified Economic Development Reports, CVS employees and their dependents utilized $5.7-million in medical assistance during the four-year period in which the Woonsocket-based company also received $63-million in tax benefits.

Since 2008, CVS has received more state subsidies than any other business: $175-million of the nearly $350-million disclosed in the Division of Taxation’s annual reports on tax credits and incentives.

The second and third highest totals for Medicaid-funded benefits were at jewelry maker Tiffany & Company, and submarine builder Electric Boat, with employees and their dependents receiving $4.5-million and $3-million in government-funded health insurance benefits, respectively.

“We tend to call that hidden taxpayer costs,” said Phil Mattera, research director at the Washington, D.C.-based corporate accountability nonprofit Good Jobs First.

TOTAL RITE CARE/RITE SHARE BENEFITS (2014-2017):

1.) CVS: $5.7-million

2.) Tiffany & Company: $4.5-million

3.) Electric Boat: $3-million

4.) Citizens Bank: $2.7-million

5.) Advance Stores Company: $504,000

6.) Perdido Production of RI: $492,000

7.) Factor Mutual Insurance Co.: $354,000

8.) FMR LLC: $270,000

9.) United Natural Foods Inc.: $262,000

10.) WaterRower Inc.: $116,000

11.) Rite Solutions: $54,000

Mattera said his organization tracked Medicaid coverage to employees of companies capitalizing on government subsidies more closely last decade but states have since pulled back on their reporting disclosures. In this area, Rhode Island can be credited with increasing its transparency in recent years.

Mattera said use of government-assisted health insurance went up after the 2010 passage of the Affordable Care Act, commonly referred to as Obama Care, in states that took advantage of Medicaid expansion under the law.

“Medicaid now is available to people at somewhat higher income levels,” Mattera said in a phone interview. “So it’s a little trickier to make the same argument as before when you could say that anyone getting assistance was really in poverty. Now you’ve got to qualify it.”

He added, “But the general principle still does apply, which is that companies that are getting subsidies should really be providing adequate health insurance to their employees at the workplace, and, if they’re not, then it’s kind of a signal that it’s a substandard job.”

TOTAL TAX CREDITS AND INCENTIVES (2014-2017):

1.) CVS: $63-million

2.) Citizens: $22.4-million

3.) Electric Boat: $14.3-million

4.) FMR LLC: $7.7-million

5.) Perdido Productions of RI: $3.2-million

6.) Factory Mutual Insurance Co.: $1.65-million

7.) Tiffany & Company: $1.3-million

8.) United Natural Foods Inc.: $932,000

9.) WaterRower Inc.: $183,000

10.) Rite Solutions: $20,000

11.) Advance Stores Company: $7,100

Rite Care, according to the state Office of Health & Human Services website, “is Rhode Island’s Medicaid managed care program for families with children, pregnant women, and children under age 19.”

Rite Share is an assistance program “that provides help paying for an employer’s health insurance plan.” Under Rite Share, the state can pay a portion or all of the cost of an employee’s health insurance coverage.

Eligibility for the assistance programs is set at an annual income up to 133 percent of the federal poverty level (FPL) for parents with children under 18 years of age; 253 percent of the poverty level for pregnant women; and up to 261 percent of the FPL for children up to age 19.

The 2018 federal poverty level, as stated on healthcare.gov, is $16,460 for a family of two, $20,780 for a family of three, and $25,100 for a family of four. The poverty line is set at $33,740 for a family of six.

According to the Institute for Research on Poverty at the University of Wisconsin-Madison, “The U.S. Census Bureau determines poverty status by comparing pre-tax cash income against a threshold that is set at three times the cost of a minimum food diet in 1963, updated annually for inflation using the Consumer Price Index.” Some research suggests—and advocates argue—the federal poverty level is too low when childcare, housing and other costs are taken into account.

Companies receiving economic development subsidies in Rhode Island with employees and dependents also on medical assistance since 2014 include Citizens Bank, with $2.7-million in medical assistance paid out, Factory Mutual Insurance Company, $354,000, and United Natural Foods Inc. (UNFI), $262,000.

[Disclosure: I previously worked at UNFI.]

According to the most recent Unified Economic Development Report, statewide CVS Health had the highest number of employees and dependents on government medical assistance in 2017, at 163, also a four-year high for the company. Electric Boat was second at 99, with Citizens third at 67; the Providence-based bank peaked in 2015 at 216, the highest one-year total for any company receiving tax incentives in Rhode Island.

Linda Katz, policy director at the Providence-based Economic Progress Institute, a group that advocates for policies that benefit lower-income Rhode Islanders, said medical assistance to employees at companies receiving state subsidies promoted as investments intended to develop jobs raises “a fundamental issue about public-private partnerships and the responsibility of companies themselves.”

“The issue of: where’s the right balance?” Katz said. “Where are companies providing comprehensive, affordable health insurance for their employees, and where does the state have to step in to do that?”

Doug Hall, the Economic Progress Institute’s director of economic and fiscal policy, said Rhode Island should expect more of companies receiving subsidies.

“I think it’s important that we have those safety nets for folks when the salaries that they’re earning are not enough to help them make ends meet,” Hall said. “At the same time, I think that there’s an onus on all employers, but certainly those that are getting tax incentives from the state to pay a fair wage.”

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