Manhattan Institute

Ending the Union Medicaid Skim

Organized labor has been dunning home health-care workers for years, without their consent—but now the Trump administration has stepped in.

Even when the Supreme Court tells a government labor union that it can’t do something, there’s no guarantee that the union will comply. In its 2014 Harris v. Quinn decision, the Court ruled that an Illinois law forcing home health-care workers—paid with Medicaid funds—to shell out cash to labor unions was unconstitutional. That should have ended unions’ ability to collect fees from these workers—many of whom were not really professionals but were receiving a small subsidy from Medicaid to care for disabled family members at home—unless the workers agreed to join the union.

In response, labor-friendly states crafted loopholes to keep the cash flowing to unions. Now the Trump administration has stepped in, moving to stop unions from skimming funds from paychecks. The Center for Medicaid Services has ruled that federal law does not allow the diversion of Medicaid funds to third parties, including unions. Caregivers can join a union if they wish, but unions must collect dues directly from their members.

The battle stems from Medicaid administrators’ decade-long efforts to cut the cost of health care for the disabled by having family or friends care for these patients in their homes, in exchange for small government subsidies. Unions, notably the Service Employees International Union, saw a way to exploit these arrangements. They got politicians in states like California and Illinois to declare that these caregivers were local- government employees, and thus could be organized and represented by unions. Labor groups held organizing drives without the knowledge of many of these workers, who had no central place of employment. Small groups of sympathetic workers voted for union representation, compelling everyone else in the “shop” to pay the union dues or a fee to represent them, even if they declined to join the union. In Los Angeles County alone, 74,000 workers were added to union rolls in the mid-1990s.

Some workers, like Pamela Harris in Illinois, objected to the arrangement because the union gave her no benefits. She and seven other homecare workers successfully sued in a case that went to the Supreme Court, where the justices ruled 5-4 that because the workers were hired by individual patients, they could not be considered state employees. Workers remained free to join a union, but they were also free to opt out, and they couldn’t be forced to pay an “agency fee” for any efforts that the union made on behalf of all workers. 

That hasn’t ended the union gravy train, however. Sympathetic politicians in several states have made it difficult for those workers to leave the union. Oregon and California, for instance, give workers only a brief window, once a year, to declare that they want to quit the union. If they miss that period, they must remain members for another year. In Washington, homecare workers complained that the state required all families that join the program to go to a union-run orientation session. One worker told the Daily Signal last year that it was never made clear at her session that she could opt out. “I don’t know what benefit we get from the union,” she said. The Obama administration provided unions with more help, ruling in 2014 that states could divert Medicaid funds to unions to pay for dues of those who voluntarily joined.

The Trump administration has reversed that ruling, observing that the Social Security Act explicitly prohibits government from sending Medicaid funds to anyone except health-care providers. The stakes are high. In 2017, three years after the Quinn ruling, unions were still collecting about $150 million in Medicaid money to pay for union dues, according to a Freedom Foundation study. Advocates for the workers claimed that many didn’t even realize that the deductions were for dues.

Unions and their political allies are apoplectic, though their objections to the Trump administration’s ruling mischaracterize it. Senator Ron Wyden from Oregon insists that the administration is blocking homecare workers from fighting “for better working conditions like living wages and basic benefits.” But workers are still free to join a union and fight for those benefits if they believe they’re being treated unfairly. What the unions and their allies really fear is that without compulsory membership and the automatic deduction of dues, many workers will simply not join the union. There has never been a compelling reason for them to be organized—and the unions know it.

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