Could Big Companies Dropping Health Coverage Actually Be A Good Deal For Workers?
Recently, a series of big companies have announced that they will drop health coverage for portions of their employees in light of the Affordable Care Act. The headlines have ranged from “UPS dropping coverage for employed spouses, IBM reworking retiree benefits,” Home Depot and Trader Joe’s dropping medical plans for part-time workers (though Trader Joe’s will provide them with a $500 payment), and Walgreens telling “160,000 workers they must buy insurance through a private exchange.” Even the cities of “Detroit and Chicago have proposed ending health plans for current or retired municipal workers, since they’ll be able to buy subsidized coverage through the health-care law.”
Some have cited these developments as evidence that Obamacare is bad for workers. As Bloomberg News notes, “The act now is giving businesses cover to loosen the decades-old link between jobs and health insurance.” The law does include a number of benefits and fees – like banning lifetime limits on essential health care, requiring insurers to cover those with pre-existing conditions, and charging a “Cadillac tax” – that can increase costs for employers and insurers. Yet, “experts point out that companies have been shifting more of the burden to workers for years” prior to the Affordable Care Act, and note specifically that “[b]usinesses have been curtailing spousal coverage and retiree benefits for more than a decade.”
In fact, some argue that rather than hurting workers, these developments under Obamacare are giving companies a way to provide a better, more stable deal on health insurance to their employees. That’s what Trader Joe’s has been saying about its own changes. According to the company, “the law is centered on providing low cost options to people who do not make a lot of money. Somewhat by definition, the law provides those people a pretty good deal for insurance … a deal that can’t be matched by us — or any company.” Recent data from the Kaiser Foundation suggesting that premiums under Obamacare will be lower than the Congressional Budget Office expected help to support this argument. But, as Trader Joe’s explains, employees are “only able to receive the tax credit from the exchanges under the act if we do not offer them insurance under our company plan.” Consequently, the company decided that the best approach for some of its workers was to drop the coverage it provided. Other employers who wish to provide low-cost, reliable health care to their workers – while saving themselves money in the process – may be trying to replicate that approach.
In other words, while it may be true that the law does not quite live up to President Obama’s claim that “if you’re one of the more than 250 million Americans who already have health insurance, you will keep your health insurance,” it may still live up to another claim that he’s made: that the law will “make [insurance] more secure and more affordable” – particularly for low-income workers.