OLYMPIA, Wash. — In a move that would capitalize on provisions under President Barack Obama’s health care law but could cost the federal government millions of dollars, Washington state lawmakers have found a creative way to pass a large chunk of their health care expenses along to Washington, D.C. – and analysts say others are likely to follow suit.
The plan threatens to affect the federal budget and the pocketbooks of some part-time workers, as it would push a group of employees out of their current health care plans and into an exchange developed under the Affordable Care Act.
Observers say the shift seems to run counter to the intent of the new health care law. Supporters, however, say it’s a viable strategy for governments to pursue as they manage the insurance rules related to part-time staff.
Washington state appears to be the first major government to seriously explore the possibility of pushing workers into the exchange — but it probably won’t be the last. Rick Johnson, who advises state and local governments on health care policy at the New York-based consulting firm Segal Company, said he expects it will be an option some governments will look at in the years to come.
“I can see that as one of the solutions out there,” Johnson said.
A spokeswoman with the Department of Health and Human Services declined comment, and it’s unclear whether the federal government accounted for this possible outcome.
While Democratic lawmakers have expressed concern about the Washington state plan this year, it is drawing growing interest among a bipartisan group of political leaders in the state. Democratic Gov. Jay Inslee, who supported the Obama health care law while in Congress, has reservations about the plan.
But the former congressman said federal rules don’t dictate how employers and employees should handle insurance coverage and indicated that he may consider supporting the idea in the future.
“It’s one of those ideas that’s premature for us to launch this year, but I don’t think we should take it off the table,” Inslee said Tuesday.
The Washington state proposal has come before lawmakers as governments around the nation are formulating strategies to manage those who don’t work 40 hours a week, since the federal law requires employers to provide coverage for those working at least 30 hours.
Virginia, for example, is requiring all part-time employees to work fewer than 30 hours, which will help the state avoid penalties for not providing health coverage. Florida, facing a potential $300 million penalty for not covering workers who have 30 to 39 hours a week, is moving to extend coverage to those employees.
Washington state is in a less common situation, since it already provides coverage for part-timers down to 20 hours a week.
Budget writers in Olympia say their plan would save Washington state $120 million over the next two years. However, it would consequently push more health care costs onto the federal government, since many low-income part-time state employees and education workers would likely qualify for federal subsidies.
Under the proposal, which has been advanced as a way to help deal with a $1.2 billion budget shortfall, Washington state would make policy changes and secure agreements in which staffers who work between 20 and 30 hours a week would get extra compensation but lose state health coverage. They would then be eligible to get health care in the federal plan, without any consequence for the state.
K-12 workers would have to adopt new bargaining agreements to implement the change, though the state would help by offering sweeteners that would be equivalent to as much as a $2 per hour raise.
Rick Chisa, political director at the Public School Employees of Washington, said the union is open to shifting some workers to the exchange but didn’t feel that the current proposal — an inducement valued at perhaps $200 a month for someone working 25 hours a week — provided an adequate incentive, especially if it may be taxed as compensation.
He said the change may eventually make sense for cafeteria workers and teacher’s assistants who are on the low end of the pay spectrum, but union leaders also want to see what the insurance product will end up looking like in the exchange before making that move.
“We want to make sure that we’re not selling workers short and being mesmerized by a shiny $2 bill,” Chisa said. He said it was “very unlikely” for such a shift to happen this year.
The shift could be a problem particularly for part-time workers who have larger family incomes.
Steve Hodes, who works 24 hours a week doing policy work for the Employment Security Department, said he would not qualify for insurance subsidies because his wife makes a decent salary working as an attorney.
He suspects he and his family might be on the hook for thousands of dollars in new expenses if he was moved to the exchange, though solid numbers are elusive since the exchange doesn’t exist yet.
“They don’t have a clue how much it is,” said Hodes, 63.
Under the federal law, large employers who don’t provide coverage to full-time workers will face penalties, but they won’t face penalties for not covering employees who work under 30 hours a week. Thousands of part-time government employees in Washington state work between 20 and 30 hours a week and currently qualify for state medical coverage.
Observers have been concerned about how private employers will handle the new health care law and the possibility that some may shed insurance coverage. The owner of Olive Garden and Red Lobster restaurants, for example, began experimenting last year with putting more workers on part-time status.
Virginia is doing something similar, with Republican Gov. Bob McDonnell directing that all part-time state employees work less than 29 hours weekly. That is creating a financially crippling problem for many of Virginia’s 9,100 adjunct faculty members at the state’s 23 community colleges on 40 campuses statewide.
“I’ve never anticipated getting rich off being a teacher,” said J. Gabriel Scala, an adjunct English professor at J. Sargeant Reynolds Community College in Richmond.
“But the rent has to be paid. And I have to eat. And gas has to be put in the car — and $17,000 a year isn’t going to do it,” she added.
The efforts appear to be the beginning stages of governments working to manage their costs under the health care law.
Washington Democratic state Sen. Jim Hargrove, one of the budget writers who helped develop his state’s plan, said lawmakers were considering the option as a way to help both employees and the state budget.
“We’re looking,” Hargrove said, “at what the possibilities are.”