It seems like a doomsday scenario: Employers will drop health care coverage in droves, leaving employees to fend for themselves in the ridiculously expensive individual market or in some convoluted government-run exchange.
Yes, a lot of things associated with health care reform don't make sense, but at least there are some logical steps here and there — especially when it comes to exchanges and who they might benefit.
Let's set the record straight; if you’re a full-time employee working for a midsize or large company, you probably don't have to be so concerned about completely losing your health care coverage...at least for now. But for others, whose precarious employment situation leaves them more vulnerable to medical debt, these health care exchanges may be the most viable alternative to comprehensive, employer-sponsored health insurance.
Employers seem to understand that. We all know no two workplace structures are the same. Not every single employee is going to be full-time and eligible for full medical benefits. Even with the new requirement that employees working more than 30 hours per week be classified as full-time (and thus eligible for health coverage), I expect many employers will slim down hours just so they can dodge the extra costs.
Which brings us to health care exchanges. According to a new study from the National Business Group on Health, 82 of the nation’s largest employers are anticipating that there will be certain segments for which an exchange will be an option. The top three includes retirees (51 percent), COBRA plan participants (38 percent) and current part-time employees (35 percent).
Why? Most likely because these three segments of the American work force have the hardest time receiving affordable, essential health care benefits (there’s also the unemployed, self-employed and small-business employees, but that’s another blog for another day).
These three demographics also coincidentally have already had a health care reform or recession-related program established that was supposed to help them keep affordable health care coverage until 2014. While they had some great starts, one is already broke, one has expired and one is supposed to phase out.
Let’s look at retirees – or more specifically, early retirees under age 65. Back in 2010, President Obama created a $5 billion program aimed at helping companies continue to offer retiree health care benefits (43 percent of them expected to reduce or eliminate them). The program was set to expire on Jan. 1, 2014, when these retirees could turn to the exchanges for policy purchases.
The four-year initiative ran out of money in less than two years.
Then there are COBRA participants – those who elected to keep their health coverage after unemployment, but may or may not have realized they would no longer be getting employer premium assistance, nor a government subsidy, which was available only to those who were laid off between September 2008 and May 2010. The subsidy covered 65 percent of health care premiums for 15 months of the 18-month COBRA period.
Congress has not granted another extension.
To give you an idea of how hard it is to afford COBRA, according to the Kaiser Family Foundation, coverage without a subsidy is almost three times the cost at $1,137 for a family policy and $410 for an individual, versus $398 and $144, respectively.
Last on the list are part-time employees. Remember the McDonald’s mini-med controversy? Though the huge fast-food chain didn’t want to imply that it would leave its workers scrambling for health coverage, a Wall Street Journal story broke the news that the company informed the Department of Health and Human Services it would have to dump its limited medical policies for 30,000 workers. That's because these plans don’t meet annual limit requirements.
It seemed so counterintuitive to what health care reform was trying to accomplish. Regulators were facing a major loophole that was best described in a 2010 Kaiser Health News report:
“The waiver has reignited a debate that wasn’t settled during the contentious health care battle: Should the government insist on comprehensive insurance, even if it costs so much that some employers drop coverage entirely?”
Since then, HHS has granted hundreds of waivers, ultimately changing medical loss ratio regulations so they could accommodate situations in which “skimpy” mini-meds were better options than providing nothing.
Let's face it; all these tried-and-failed attempts at bridging health care gaps to 2014 have already highlighted cracks within the health care reform platform. Still, as I've heard from several benefits managers, it's too early to tell how any reform policy will help or hurt the availability of employee coverage. But even if the feds can't get things quite right, at least they — and employers — understand who reform can help most.