What’s Obamacare Got to Do With It?
It’s not entirely clear why United Parcel Service Inc. is blaming the Affordable Care Act for its decision to drop 15,000 of its workers’ spouses from the company’s health-insurance plan. What’s clear is that it’s not a terrible thing: It’s simply a shift of health-care costs from UPS to the spouses’ employers who already offer health insurance.
In a memo to its employees, UPS cited the law as a contributing factor in its decision. “This change is consistent with the way many large employers are responding to the costs associated with the health-care reform legislation,” it read. As if to prove the point, another large employer, the University of Virginia also announced this week that it wouldn’t provide coverage to spouses of employees if their employers also offered insurance.
It’s hard to say, however, which aspects of President Barack Obama’s 2010 health-care-reform law might be causing expenses to rise so much. In the case of UPS, because it is so large, with 399,000 employees at the end of last year, it is exempt from the law’s requirements that employer health insurance cover specific medical services, such as maternity care. And because UPS funds its own health insurance, it is not subject to other costs included in the law. Perhaps the new limits on employees’ out-of-pocket expenses -- $6,350 a year for an individual and $12,700 for a family -- are driving up UPS’s costs, because when employees pay less, employers have to pay more.
UPS also says its new policy is needed because of the “rising cost of health care in general.” Yet this cost is rising far more slowly than it was before the Affordable Care Act was passed. Annual premiums for employer-sponsored family health coverage are up only 4 percent this year, according to the Kaiser Family Foundation. Over the past decade, they have generally been rising about three times faster. And the slowdown appears to be occurring in part in response to the new law.
It’s possible, of course, that UPS is using the health-care law as a smokescreen for cutting costs it wanted to cut anyway. And at one point its internal memo takes an abnormal interest in other people’s business. “Since the Affordable Care Act requires employers to provide affordable coverage,” it reads, “we believe your spouse should be covered by their own employer.”
Duly noted, UPS. Also to note: The very law the company cites is helping to save people money on health care. It would be a lot harder for UPS to cut coverage to employees’ spouses if those spouses were to be left without coverage at all. The Affordable Care Act gives people more options for health insurance -- either from employers or on the individual market that the new state exchanges will provide.
No one can blame companies for wanting to shift the cost of covering some workers’ spouses to those spouses’ employers. But such a shift needn’t lead to any loss of coverage -- a happy outcome that Obamacare makes more likely, not less.
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