Wednesday, December 11, 2013
The letters must be out by Oct. 1. Many have already arrived. The Affordable Care Act, commonly known as Obamacare, requires employers to inform their employees that their choices for health insurance coverage are changing. The new law has created an online marketplace for purchasing health insurance coverage referred to as a Health Insurance Marketplace, or exchange.
Beginning in October, employees will be able to find and compare health insurance plans through an exchange and sign up for coverage that starts as early as Jan. 1, 2014. Those who purchase coverage through an exchange may be eligible for a federal subsidy depending on level of income. However, such subsidies are available only to those not eligible for employer-provided coverage that is "affordable" and provides "minimum value." A determination as to what constitutes "affordable" and "minimum value" will be made by Jan. 1, 2014.
This set of hypothetical comparisons has set off a flurry of activity, not merely in the newly created exchanges, but also, and probably more importantly, in the employer coverage arena. Many companies have increased the portion of their workforces considered "part time" so as to avoid mandatory coverage. Others have estimated that paying penalties for not providing coverage is less expensive than maintaining existing plans. Others have ceased employee coverage and given raises intended to help employees purchase exchange-provided insurance. Some have kept existing employer-provided coverage but reduced or eliminated dependent coverage, increased co-pays and deductibles and/or increased the portion of health insurance premium expenses deducted from employee paychecks.
Still others have eliminated employer-coverage for retirees. In the case of IBM, the company gave its retiree program a big chunk of stock and said, in effect, "OK, here's a big health savings account; now you use it to get the insurance you want on the exchanges." This move effectively transferred the actuarial responsibility for estimating future health care needs and costs and setting aside enough money to cover them from the company to the retirees.
All this churn is wonderful. It will provoke lots of thinking about a major problem and stimulate innovation. If the major consequence of Obamacare is to jolt Planet Healthcare once and for all out of the orbit of Employer Provided Health Insurance, it will have to be deemed a stunning success regardless of whatever else happens.
Empowering individuals to become involved in their own health care decisions. Pressuring health care providers to find new ways to charge for their services. Removing the enormous administrative plateau that faces micro-businesses considering the frightening and complicated choice of adding employee number one. Removing the barrier that keeps would-be entrepreneurs from leaving a "safe job with benefits" to chase their dreams of starting a new business. All of these changes would be movements in the right direction -- right for our economy and for our health.
I can't wait for the day when I see a clever talking lizard telling me how much I can save on my health insurance.
Charles Lawton is chief economist for Planning Decisions, Inc. He can be contacted at: