Future of Job-Based Coverage Still Uncertain After Reform Law Ruling
Despite the Supreme Court's decision to uphold the federal health reform law, businesses still face an uncertain future when it comes to providing health coverage to employees, the Los Angeles Times reports.
Larger businesses are unlikely to drop employer-sponsored coverage in the near future, while some smaller companies might also opt to keep such benefits as a way to stay competitive. However, retail, hospitality and other service-oriented companies could drop health coverage for their employees (Terhune, Los Angeles Times, 6/30).
In some cases, the financial penalties employers could incur for not providing health coverage to their employees are less costly than insurance premiums, a situation that might prompt employers to drop coverage. Under the law, businesses with more than 50 employees that choose not to offer insurance will be fined $2,000 for each employee, with 30 employees excluded from the fine.
Steve Graeber, co-chair of the California Business Association's health insurance committee, said that providing even low-cost coverage can sometimes cost employers $3,000 to $4,000 per worker annually (Johnson/Carey, San Jose Mercury News, 6/29).
In another scenario, some businesses might drop coverage for employees and instead give workers a lump sum, or defined contribution, to buy their own insurance through state exchanges -- an approach that resembles current 401(k) retirement plans, according to the Times. This strategy already has been tried by hundreds of businesses in recent years, and it is more likely to be used by smaller companies, especially those in the retail and hospitality industries.
Bryce Williams, CEO of Extend Health, said that corporate customers usually save about 15% to 25% on retiree health plans -- savings he believes they could see by switching current workers to a similar defined contribution plan. Less than 3% of retired workers are negatively affected by higher costs, Williams added (Los Angeles Times, 6/30).
Businesses also are still waiting to see a draft of how regulators will implement the law and its requirements. Meanwhile, hiring and coverage plans will probably remain uncertain as long as the future of the economy is unknown (Schroeder, "On the Money," The Hill, 7/1).
Lauren Lucia, a policy analyst with the Center for Labor Research and Education at the University of California-Berkeley, said that regardless of the uncertainty she expects job-based coverage to drop by no more than 3% in the coming years (San Jose Mercury News, 6/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.