Freedom Foundation

Freedom Foundation report exposes scope of unions’ Medicaid dues skim

A new report released this week by the Freedom Foundation documents for the first time the history and scope of the unionization of state-paid home care workers around the country and the resulting diversion of hundreds of millions of Medicaid dollars to government unions.

In 2017, at least eight states — including California, Connecticut, Illinois, Massachusetts, Minnesota, Oregon, Vermont and Washington — skimmed nearly $150 million in union dues out of state payments to more than 350,000 home caregivers serving Medicaid-eligible disabled and elderly clients.

All told, states have deducted more than $1.4 billion in union dues and fees from caregivers’ wages from 2000-17.

In most cases, caregivers are related to the clients they serve.

The federal Centers for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (HHS) last month issued a Notice of Proposed Rulemaking (NPRM) to rescind a regulation adopted in 2014 by HHS during President Obama’s administration that gave some legal cover for states to deduct union dues from caregivers’ pay.

However, dues skimming from Medicaid started long before that, beginning in California in 1992, and appears to violate federal statutes requiring payments for services to be made directly to providers.

CMS estimated in the NPRM that states siphoned about $71 million in Medicaid funds to unions per year, but based its estimate only on a handful of news reports discussing the subject. The Freedom Foundation’s state-by-state analysis relies primarily on state payroll data and financial reports unions have filed with the U.S. Department of Labor and is the first attempt to quantify the scope of the practice.

“It is very heartening to see this administration taking the first practical steps to stop states and unions from deducting money from the Medicaid checks of home caregivers serving our society’s disabled and elderly,” said Freedom Foundation director of labor policy Maxford Nelsen.

“This illegal and exploitative practice has victimized hundreds of thousands of caregivers. It has only been allowed to persist because it generated significant funds for a politically connected special interest group. Hopefully the administration follows through with meaningful action and does the right thing for caregivers.”

Some states have already taken the initiative to end union dues skimming from Medicaid, including Iowa, Maryland, Michigan, Missouri, Ohio and Wisconsin. An attempt to unionize home caregivers in Pennsylvania is on hold pending a state Supreme Court ruling.

The U.S. Supreme Court dealt a blow to the unionization of home caregivers in 2014 when it ruled in Harris v. Quinn that “partial-public employees” like Medicaid-paid caregivers could not be forced to pay union dues or fees against their will.

Nevertheless, unions and their political allies in state governments have since devised a number of coercive countermeasures designed to keep skimming funds from caregivers’ Medicaid payments, like collecting dues automatically and forcing caregivers to opt out, only permitting resignations during narrow annual periods as short as 10 days, and pressuring caregivers to sign up for union membership in captive-audience meetings with union organizers.

“States’ role as dues collectors has enabled many of unions most coercive practices,” Nelsen said.

“Taking states out of the union dues collection business would help put power back in the hands of the caregivers,” he said. “It wouldn’t prevent anyone from choosing to join and pay dues to a union if they wish, but it go a long way towards ending some of unions’ worst practices.”

The Freedom Foundation’s report, “Getting Organized at Home: Why Allowing States to Siphon Medicaid Funds to Unions Harms Caregivers and Compromises Program Integrity,” is available here.