Trader Joe's Health Insurance Disgrace

by John M. Curtis
(310) 204-8700

Copyright September 15, 2013
All Rights Reserved.                                      

             Throwing part-time employees working less than 30 hours to the wolves, Trader Joe’s Co., the nation’s largest discount specialty grocer with 400 stores nationwide, announced they would yank health insurance from their workers.  Known for resisting unions because of their generous fringe benefits, the ever-popular purveyor of fine wines and specialty groceries revealed their cavalier plan of forcing part-time employees to fend for themselves in the soon-to-be Obamacare marketplace.  Trader Joe’s executives complained that rising health insurance costs under Obamacare forced them to take the draconic steps of risking losing profit-margins and earnings in their current business model offering maximum value to customers.  Starting Jan. 1, 2014, Traders Joe’s Co. will give $500 to part-time employees to help them buy Obamacare at state-authorized insurance exchanges.

             When the avalanche of adverse publicity hit after Trader Joe’s Co. made their announcement Sept 13, the company stepped up its PR offensive.  Trader Joe’s hoped to avoid hoards of defecting customers potentially triggered by what most people see a cavalier mover against part-time workers.  Without the benefit of unionization, Trader Joe’s employees counted on upper management, a corporate culture that put workers first.  Announcing that part-time workers would actually see a reduction in insurance costs under the new plan by seeking tax credits and government subsidies doesn’t undo the company’s breach of employer-based health care.  Whether or not Trader Joe’s saves money, tossing its employees into the Affordable Care Act is no way to treat loyal workers.  Large companies—especially non-union shops like Trader Joe’s—have an obligation to cover employees.

              Major health insurers—and their authorized brokers—have been steadily raising rates on group health plans trying to offset added costs under Obamacare.  While major employers know the real costs of health insurance under the ACA are dropping, they’ve been socking it to employers, capitalizing on all the negative propaganda about Obamacare. “Depending on income earned outside of Trader Joe’s, we believe that with the $500 from Trader Joe’s and the tax credits available under the ACA, many crew members should be able to obtain health coverage at very little, if any, net cost,” said Trader Joe’s statement.  Now facing a new problem implementing the AFA, large companies like Trader Joe’s should be able to capitalize in house on the savings, not pass the problem onto employees.  Whatever savings individuals attain in insurance exchanges, companies should benefit too.

             Under the AFA, companies are not required to provide heath insurance for employees that work less than 30 hours.  While there’s nothing wrong with having that loophole for less profitable companies, Trader Joe’s isn’t one of them.  Because the letter of the law allows them to cut off part-time employees, it’s exactly the wrong thing to do.  Obamacare was not created to get privately-held or publicly-traded companies off the hook for providing employee-based health care.  Because there’s so much disinformation and dissention in Congress about Obamacare, lawmakers can’t fix an obvious problem allowing companies to turn the screws on employees working less than 30 hours a week.  Whether or not Trader Joe’s Co. has the right under Obamacare to exclude part-time employees working less than 30 hours, that doesn’t give profitable companies like Traders Joe’s a way to get off the hook.

             White House officials need to put their foot down with large public or private companies that the government expects them to continue providing the same level of employer-based health care.  It’s disgraceful that Trader Joe’s would try to pull a fast one on part-time employees.  If Trader Joe’s insurance premiums have risen under Obamacare, they need to demand lower premiums from their insurers.  Adding some 40 million new subscribers should, by anyone’s appraisals, lower health care premiums.  Riding a tsunami of bad publicity on Obamacare, insurance companies are gouging employers’ health care premiums.  There’s no justification whatsoever for raising rates on small, moderate or large employers.  Instead of dumping part-time subscribers, Trader Joe’s should go back to their insurer and demand lower premiums now that Obamacare has arrived.

             White House and Congressional officials need to go back to work to fix some loopholes of Obamacare permitting companies like Trader Joe’s from canceling insurance on 30-hour-or-less part-time employees.  Whether or not individuals could obtain more government subsidies and pay less under Obamacare is irrelevant to small, medium and large companies currently providing employer-based health care.  Companies like Trader Joe’s have a solemn duty to provide employer-based health care and not stick it to the government.  It’s wrong for Trader Joe’s to pass health care costs on the government, justifying the decision on saving employees money.  Companies that try to pawn off health care costs on the government should pay hefty fines.  No company with a prior history of providing health coverage for part-time employees should be allowed to exploit the government.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com.and author of Dodging the Bullet and Operation Charisma.