Amazon Prime may now make sense for those on Medicaid – reduced monthly rate plus Amazon discounts

Amazon Prime memberships are now available at the special price of $5.99 per month for tens of millions of American consumers. Prime subscriptions normally cost $12.99 per month, or $99 per year, but Amazon just announced it will give a $7 discount on the monthly rate to Medicaid recipients.

Amazon Prime subscribers get a host of benefits from the e-retail giant, including free two-day shipping on most Amazon orders, free unlimited streaming of video and music, and occasional special discounts not available to non-members. Qualified customers would be able to renew their Amazon Prime subscriptions annually at the discounted rate for up to four years, Amazon said.

The new Prime discount is clearly intended as a way for Amazon to expand its shopper base. Amazon already has a stranglehold on wealthy shoppers: More than 70% of upper-income households—with annual income over $112,000—had Amazon Prime memberships, according to one study. The deal for Medicaid recipients is widely being portrayed as Amazon’s strategy for “taking aim at Walmart” by wooing away low-income shoppers.

Last summer, Amazon began offering a discount rate of $5.99 per month for Prime memberships to customers receiving government assistance. To get the lower Prime rate, you had to have an Electronic Benefits Transfer (EBT) card, which is given to people who qualify for assistance programs like Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Women, Infants, and Children Nutrition Program (WIC).

According to government data, some 68 million individuals are enrolled in Medicaid, the federal-state-funded health insurance program for needy and low-income people. As of 2016, roughly 44 million people got benefits from SNAP, the program formerly known as “food stamps.”

When Amazon rolled out its discounted Prime rate to EBT cardholders last summer, the Wall Street Journal described it as a move to steal business away from Walmart, which sees a huge portion of its sales from SNAP beneficiary customers.

Regardless of the larger retail battles being waged, are cheaper $5.99 Amazon memberships actually a good deal for poor people?

Obviously, the discounts help people save money compared to the normal cost of Amazon Prime. And yes, an Amazon Prime subscription brings with the possibility of saving money in other ways: In addition to lower prices and free shipping often available at Amazon, Prime members could theoretically cut their spending by canceling Netflix, Spotify, or other streaming services and using Amazon’s free options instead.