A union ‘dues skim’ from home health care workers will hurt the most vulnerable

President Biden promised to be the most pro-union president in history. And he’s proving loyal to that commitment, but at the expense of the seriously ill and disabled.

Biden’s Department of Health and Human Services (DHS) proposed a new rule that would allow unions to skim dues from home health care workers. Under the proposed rule, DHS would permit diversion of Medicaid payments to third parties, including unions. While this may seem innocuous, it is anything but. In fact, this rule would reauthorize what is known as a “dues skim,” a scheme that has benefitted unions at the expense of vulnerable Medicaid recipients and their caregivers.

In 2011, the Mackinac Center was the first organization to discover the redirection of Medicaid payments to labor organizations. In Michigan, the Service Employees International Union’s (SEIU) local affiliate recognized it could obtain “dues” from home health care providers and worked with the state to force-unionize them. First, the SEIU lobbied the state to create an agency known as the Michigan Quality Community Care Council that would serve as the putative employer of home health care providers in Michigan. The SEIU then bargained with that “employer” to unionize these workers. This all happened even though fewer than 20 percent of the affected home health care providers voted for the union. Many were not even aware that a unionization election had occurred. 

As a result, a portion of Medicaid payments meant for covering the costs of home health care providers  — often the family members of seriously ill or disabled individuals — was redirected to the SEIU. By 2012, the SEIU had successfully skimmed over $34 million in Michigan alone. After reforms were passed banning dues skim (and later reaffirmed in a ballot proposal), home health care providers overwhelmingly demonstrated they did not wish to be unionized. In less than a year, SEIU Healthcare Michigan’s membership fell 80 percent. In other words, when given the choice about whether to become a member of a union, only 20 percent of providers decided it was worthwhile. 

The consequences of dues skim become even worse on a national scale. From 2000 to 2017, unions successfully diverted approximately $1.4 billion in Medicaid payments. 

There is little justification for these payments. Although DHS claims that allowing these diversionary payments would benefit caregivers through better training and education, it has presented no evidence to support this claim. What evidence does exist suggests that such arguments are meritless. 

The position is also logically inconsistent. If unions had training opportunities that would benefit home health care providers, nothing stops them from offering those trainings for a fee. Providers could then decide whether to spend the funds they receive from Medicaid to enhance their skills by attending these training sessions. This arrangement would be consistent both with the law  and market incentives. Instead, DHS has opted for an arrangement that favors coercion and potential fraud.

The practical consequences of permitting dues skimming cannot be understated. The providers from whom payments would be diverted are often the family members of those with serious illnesses or disabilities. Without this care, the ill and disabled would be forced into an institution, likely at greater taxpayer expense. These family members sacrifice their time and energy and are lightly compensated primarily through Medicaid payments. 

Despite this, some unions have used dues skim to divert payments while providing little, if any, tangible benefits to providers or Medicaid recipients. But in this situation, unions have little to offer either party, since home health care providers are not employed by an outside agency, but rather, their patients. They work from either their own homes or the homes of their ill and disabled relatives. They manage their own working conditions and hours, based on the needs of their patient. Unions play no representational role in these areas — the traditional purpose of collective bargaining. 

DHS should not reinstate dues skim through administrative fiat. Doing so would reduce the funds available to help the sick and disabled, increase the shortage of home health care workers and direct Medicaid payments away from their intended purpose. Funds paid to caregivers should be used to support their efforts to care for the sick and disabled, not for favored political causes. 

Steve Delie is the director of labor policy at the Mackinac Center for Public Policy in Midland, Mich.