Memphis It was only a matter of time before some of the paradoxes embedded in the Affordable Care Act began to make too many employers, both good and bad, wonder if they couldn’t do better when they pay for health insurance. We’ve talked about some of the problems before, especially the incongruities around the loopholes within the definition of affordable and therefore qualified health plans.
The big issue for us with lower income workers has been that a low premium, exorbitantly high deductible plan offering essentially NO coverage past the minimum guarantees could be classified as affordable and qualified solely based on the fact that the monthly premium was under 9.5% of gross wages, regardless of the embedded barriers to actually using the health plan within your income if the deductibles were $3000, $4000, or $5000, all of which aren’t considered when it comes to affordability. And, yes, that’s crazy!
The same thing is true for spouses and dependents. If your employer provides you with qualified health insurance, then unless your children are eligible for Medicaid because of your lower income, they and your spouse are dependents on your policy. There are no reasonable limits on the cost of dependent coverage. They are not barred from purchasing separate insurance with the state or federal marketplace, but they are barred from receiving premium tax credits or cost sharing, which is what makes getting insurance attractive for millions. I’ve heard conversations about separations and whether or not filing taxes separately would allow spouses to access the marketplace in such situations, but none of these schemes are allowable.
Interestingly some smaller employers with less than 50 workers are starting to look at this in the way we knew would be inevitable. There are no fines for them not offering coverage and indeed surveys indicate that such smaller enterprises are now only providing employee health coverage in 38% of such outfits compared to 47% only a decade ago. With a blend of lower waged workers, they are realizing that they may be able to spend the same amount of money and actually help their workers and their workers family by adding their expenditure to pay envelopes or separate health purchase funds so that their employees can get better insurance for the whole family by purchasing on the exchange and benefiting from the subsidies and tax credits.
Are these loopholes or broken pieces that need to be fixed? My view is these are things that should be fixed. Unfortunately, as long as Congress is divided and the Republicans see Obamacare as something between the Alamo for the President or their own Waterloo, everyone is just pushing this thing down the road and hoping it will get there rather than trying to see how to make it work better for everyone. Employers are critical to the success of the Affordable Care Act but there are too many bells and whistles they are hearing that are encouraging them to game the system rather than making it work. Help!