Let’s see, if you are an employer and you don’t want to pay health insurance and you don’t want to be fined for not doing so, what do you do?
Well, you either keep your total employees under 50 or you have workers who do not work more than 29 hours a week so that they are considered part time under the law.
To do this you replace full-time with part-time and you use a temp agency to supply workers rather than hire them. News reports say this is becoming big business and a strategy a growing number of companies and public agencies are considering.
There are always unintended (or ignored) consequences. In this case it may mean more Americans forced into the subsidized health insurance exchanges and making it harder for many Americans to find a full time job.
At the other end of work life more employers are dropping coverage for early retirees (Medicare eligible retiree coverage is just about gone) thereby driving more Americans to health insurance exchanges.
Does all this mean more Americans than anticipated will be using government exchanges? That’s open for debate. But one thing is clear, we are only beginning to understand the unintended consequences of this law.
- It’s gotta go somewhere!
QUINNSCOMMENTARY 
Dick, you mentioned unintended consequences, but that suggests reasoned consideration in the legislative process with dynamic modeling of the potential outcomes by knowledgeable professionals instead of what we got – a political document that never analyzed the impact on employers or for that matter taxpayers. Instead, they simply assumed employers would continue to offer coverage as before …
Even if that happened, as you and I know, the benefits design process is iterative and never ending – perennial at a minimum – and dynamic not static.
No one really cared about the private employer community response, because the alternative is now single payor…. Once employer sponsored coverage declines to less than 50 percent of the non-elderly population, it may trigger a downward spiral as there are fewer and fewer plans and participants left to shoulder the various taxes and the rapidly escalating cost shifting burden from more and more covered on Medicaid ( another 15 – 20 mm in five years) and more and more covered on Medicare ( another 3 to 5 mm a year for each of the next 15 years) – where with Medicare cuts and doc fix, both programs deploy reimbursement rates well below actual cost of services.
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Good points all.
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That was EBRI not Ebro.
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With respect to retiree coverage, you may want to look at survey data from kaiser family foundation, Ebro and mercer. We’ve gone from well over 50 percent to under 25 percent, and much much lower if you only include firms that still offer access to retiree medical to new hires. Fact is, soon, only public sector and represented employees will have retiree coverage access at hire, and once the accounting laws for those groups are updated to match private employers (if ever) those also will be gone. It is only because they make very unreasonable assumptions or ignore the long term liability that those plans continue (e.g., see post office)
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Did you see my reply to John Reilly below?
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Curious if you have any statistics or data from the consultant community on how many employers are considering dropping (or have dropped)retiree health insurance?Both Medicare and early retirees?I am really hoping I do not have to deal with these govt exchanges under the Unafforbable Health Care Act. Also I will be shocked if these exchanges are ready to go live by the Fall!
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There is a steady decline in this coverage and I suspect given the Affordable Care Act and the access to exchanges the decline will accelerate in the future. The exchanges present a great opportunity for employers to provide a fixed amount for buying coverage and walk away. New private exchanges also will accelerate this trend. Here is something from the Employee Benefits Research Institute:
Very few private-sector employers currently offer retiree health benefits, and the number offering them has been declining. In 2010, 17.7 percent of workers were employed at establishments that offered health coverage to early retirees, down from 28.9 percent in 1997.
Between 1997 and 2010, the percentage of non-working retirees over age 65 with retiree health benefits fell from 20 percent to 16 percent.
Because employers are under no obligation to provide retiree health benefits, except to current retirees who can prove that they were promised a specific benefit, and because (unlike defined benefit pension plans) employers are not under any obligation to pre-fund retiree health benefits, it is likely that employers will continue to make changes to those programs, especially for future retirees.
Earlier research found little impact of reductions in coverage on retirees, but that may be because initial changes employers made to retiree health benefits affected future retirees as opposed to then-current retirees. Over time, more and more retirees have “aged into” those program changes, resulting in the greater impact found in more recent studies.
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Thanks for the response with informative statistics.As an aside I am betting that the exchanges will not be ready on time. What is your educated opinion?
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Well, I think HHS risks a great deal of bad press and lost credibility if the enrollment goes badly, so I’m guessing they would rather delay then face that.
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Look at Medicare part d 2003-2006. Not perfect but. … More importantly, even if shaky at the start, all they are doing is enrolling in insurance… Look at part d and dual eligible effort as a better comparison. Larger risk is if insurers don’t participate to level achieved for part d. For example, last I heard UHC will be in less that 25 states, and in some, only a part of a state.
Finally, keep in mind that the exchanges will be a success, sooner or later, no matter how much of your taxpayer dollars it takes!
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