AUDIE CORNISH, HOST:
The start of the new year means that midsize employers must offer health insurance to workers or face a tax penalty. And the mandate has been in place for larger companies since last January, but employees often turn the coverage down because it's too expensive. We're going to hear now about a less-pricey plan, but it doesn't give workers the same benefits as their bosses. Fred Mogul of member station WNYC has the story.
FRED MOGUL, BYLINE: At a factory near Newark, N.J., Oasis Foods produces cooking oil, mayonnaise and other products that restaurants and distributors often purchase by the ton. Company president Duke Gillingham points to a steel vat emitting a familiar fragrance. He says right now, butter-flavored popcorn oil is in high demand.
DUKE GILLINGHAM: We get a rush this time of year with all the movie-going at the holidays.
MOGUL: So maybe some of what's in here is ending up on people's popcorn while they're watching "Star Wars?"
GILLINGHAM: Most definitely.
MOGUL: Gillingham pays close attention to the cost of raw materials, packaging and transportation. And like any employer, his workers payroll is his biggest overall expense, and that, of course, includes insurance, where...
GILLINGHAM: You know, double-digit health care cost increases have been the norm.
MOGUL: The Affordable Care Act required Oasis Foods to offer everyone insurance. That doubled the number of workers the company covers. And yet, around two-thirds of employees said no, thanks. For a family of four, insurance costs about $350 a month and has a $2,500 deductible - a lot of money for factory workers. Gillingham says he hasn't been able to find anything much cheaper than that, and he can only raise wages so much.
GILLINGHAM: The sad fact is that we're in a very competitive business, so if we don't watch what we're doing, we can be high-cost. And that doesn't serve any of the employees well.
MOGUL: Some of the workers who declined coverage are on spouse's health plans. Some are probably uninsured, and some have enrolled in Medicaid with the help of a startup Gillingham hired called Benestream.
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UNIDENTIFIED MAN: Many of your employees and their families may be eligible for better health care provided by the government.
MOGUL: In its animated online ad, Benestream shows cartoon workers and managers being crushed by mountains of insurance paperwork and health care costs until Benestream steps in. CEO Ben Geyerhahn says moving workers from private insurance to Medicaid helps the firms that hire his company.
BEN GEYERHAHN: About two-and-a-half times the money you spend with us comes back to you in the form of saved premium.
MOGUL: Geyerhahn says going on to Medicaid, which is very close to free, is also a good deal for the workers because if they make so little that they're eligible for it, they most likely can't afford regular insurance premiums. Qualifying income for Medicaid is about $16,000 for a single person or 33,000 for a household of four. And those high deductibles they would also pay before conventional coverage really starts, those undermine much of the benefit of insurance.
GEYERHAHN: Yes, this is something that will help them if they get into a car accident or have a heart attack, but this isn't something that's going to help them manage their health over the course of a year.
MOGUL: Walmart, McDonald's and other companies have made headlines for not insuring workers and letting taxpayers pick up their health costs through Medicaid. Ken Jacobs, chair of the UC Berkeley Labor Center says companies whose employees get Medicaid should shoulder some of the government's costs.
KEN JACOBS: Those employers should also be then paying more into the general pot that helps pay for the cost of health care rather than putting those costs on everyone else.
MOGUL: At Oasis Foods, Duke Gillingham says his company pays a lot in taxes, so it's a fair deal to get back almost free health care for some workers for that money. He contrasts this system to one he's experienced elsewhere.
GILLINGHAM: I lived abroad and had access to more socialized medicine.
MOGUL: This was when he and his family of six were in England.
GILLINGHAM: My kids didn't suffer from having a five- or six-minute checkup.
MOGUL: Compared with twice as much doctor time in the United States at much higher cost but without any noticeable difference in results.
GILLINGHAM: We didn't see any of the demons that people speak of when they talk about socialized medicine. There were no lines. There were no poor standard of care.
MOGUL: Gillingham might be more open to government health care than many CEOs, but he acknowledges workers so far have given Medicaid mixed reviews. Some doctors and hospitals take it. Many don't. But he says that's insurance generally. A Gallup poll last month found 67 percent of Americans are satisfied with this country's health care system compared with 75 percent of people with Medicaid. For NPR News in New York, I'm Fred Mogul.
CORNISH: That story's part of a reporting partnership of NPR, WNYC and Kaiser Health News.