There was an odd argument that came up earlier this week in the Senate Finance committee debating HB4283 to raise the minimum wage in West Virginia – raising workers’ wages would kick West Virginians off of Medicaid. This is odd for a number of reasons: first it suggests support for more dependence on public assistance programs, secondly it implicitly suggests support for lower wages, and thirdly because it came from conservative opponents of the bill.
Yes, it is true that raising the minimum wage to $8.75 in West Virginia would likely end up pushing a lot of West Virginians off of Medicaid, perhaps tens of thousands of those who have just become eligible for the very first time. As I’ve pointed out before, the majority of those West Virginians qualifying for expanded Medicaid are the working poor, many of whom are going to be making at or near minimum wage. A cashier working full-time at the current minimum wage of $7.25 an hour earns $15,080 a year, a little under 130% of the official Federal Poverty Level for an individual, qualifying them for Medicaid under the new expansion guidelines. However, that same cashier making $8.75 an hour would earn $18,200 a year, over 150% FPL, which would push them beyond Medicaid eligibility.
There are a lot of reasons that this is a good thing for West Virginia. Primary among them is that it would bring thousands of people off of Medicaid, which is the most expensive program for the state.
In the past we may have argued that pushing people off of Medicaid would be dangerous because it would likely leave them uninsured, but this is no longer the case. Today, all of these people will be guaranteed access to affordable health coverage through the insurance marketplace at Healthcare.gov. And I truly mean affordable. For example, the cashier who now earns around $18,000 a year would not have to spend more than 4.3 percent of his income on health insurance. This means that he could find a silver level Highmark Blue Cross Blue Shield plan on the state exchange for $65 per month. Plus, he’d qualify for substantial assistance in out-of-pocket costs like co-pays and deductibles.
There’s also the not-so-small matter that bringing more healthy people on to the exchange in West Virginia would improve its community rating, which could help lower premiums across the board for insurance plans offered in the exchange.
Essentially, raising the minimum wage would get more low-income workers off the government programs and reduce costs to the state in a time of serious budget challenges, all the while helping to push health insurance premiums down statewide.
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