Governments may push workers out of employer health care and into health exchange

By Associated Press
The Washington Post, April 24, 2013

In a quest to save money, political leaders in Washington state are exploring a proposal that would shift some government workers out of their current health plans and onto the insurance exchange developed under President Barack Obama’s health care law.

Lawmakers believe the change, which could affect thousands of part-time state employees and education workers, would save the state $120 million over the next two years.

The Washington proposal has been advanced as a way to help deal with a $1.2 billion budget shortfall. Under it, 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 their current health coverage. They would then be eligible to get health care in the federal plan, without any consequence for the state.

“I think it’s a great way to fully take advantage of the Affordable Care Act,” said Republican Sen. Andy Hill, one of the state’s top budget writers.

While few states are following Washington’s path at the moment, there has been concern 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.

http://www.washingtonpost.com/business/governments-may-push-workers-out-…

One of the most important design features of the Affordable Care Act was that the employer-sponsored sector of health care coverage was to be largely left alone since allegedly it was functioning so well – not only covering the largest sector of our population, but also an important source of health care financing that was already in place. What could possible go wrong with this strategy?

What are employers to think when they see that the two primary features of the Affordable Care Act – the expansion of Medicaid and the establishment of exchanges of private insurance plans – were to be partially or completely financed with government funds? If lower-income employees could be shifted into the exchanges, the federal government would provide subsidies that would help fund the health care needs of employees. The only condition is that the employee must be part time, not working more than 30 hours per week.

Private employers have already begun to reduce their employees’ hours to qualify them for the exchange plans, and now we see that state governments are considering the same approach.

The important point is that employees in this sector that was to be left intact – those with employer-sponsored plans – are not only experiencing changes in their health insurance coverage, they are also experiencing a major loss of income due to the requirement of sharply limiting the hours worked per week. Since many of these individuals already have very low incomes, the cutback will be financially catastrophic.

It is really tragic that a program theoretically designed to expand health care coverage is having such a negative impact on employment itself. This would never have happened had we enacted a single payer system. We still can, you know.