Oh, by the way: ObamaCare might not be affordable for low-wage workers after all

A bookend to Ed’s item earlier about members of Congress trembling at the thought of having to fend for themselves on ObamaCare’s health-care exchanges. Per the AP, plenty of blue-collar workers are trembling too at the thought of having to pay either unmanageable premiums or the new statutory fine for not having insurance. That’s the state of the “Affordable” Care Act these days.

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Look at it this way: O-Care has brought people at opposite ends of America’s power structure together in grievance. O wanted to be the great uniter, and now he is.

The law is complicated, but essentially companies with 50 or more full-time workers are required to offer coverage that meets certain basic standards and costs no more than 9.5 percent of an employee’s income. Failure to do so means fines for the employer. (Full-time work is defined as 30 or more hours a week, on average.)

But do the math from the worker’s side: For an employee making $21,000 a year, 9.5 percent of their income could mean premiums as high as $1,995 and the insurance would still be considered affordable.

Even a premium of $1,000 — close to the current average for employee-only coverage — could be unaffordable for someone stretching earnings in the low $20,000’s.

With such a small income, “there is just not any left over for health insurance,” said Shannon Demaree, head of actuarial services for the Lockton Benefit Group. “What the government is requiring employers to do isn’t really something their low-paid employees want.”

Aren’t low-income workers supposed to get tax credits to help them purchase private insurance, though? Yes indeed — unless their employer has offered them “affordable” coverage and they’ve turned it down. So if you reject the sort of “affordable” coverage described above, if only out of simple necessity, you’re out of luck on subsidies. As for the employers, they’ve got two options. If they’re right around the O-Care threshold of having 50 full-time employees, they could always fire a few people or reduce them to part-time status to bring their businesses under that benchmark, then cancel their health insurance policy altogether and force their employees onto the private exchanges. Or, if they can’t cut their workforce to less than 50 full-time people, they could “compromise” by offering employees a low-cost “skinny” health-insurance plan that provides preventive services and not much more. That would reduce the penalties the business would otherwise be required to pay for offering no insurance, and might end up as a welcome step towards refocusing health insurance on catastrophic coverage. But it sure ain’t what the public was sold in March 2010.

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This is, in fact, just the latest ObamaCare agony for blue-collar workers. Obama’s union pals have been grumbling lately that the coverage exemption for businesses with fewer than 50 full-time employees is creating a strong incentive to do precisely what I just described — scale down the business to fewer than 50 and then yank coverage altogether, leaving laborers to fend for themselves on the same exchanges that are terrifying Congress. They’re also unhappy that workers enrolled in union-sponsored plans aren’t eligible for tax subsidies that would help them cope with the sort of premium increases that now seem inevitable under ObamaCare. Union leaders are trying to pressure the White House for a fix, but that gets us back to the eternal debate: Is it actually preferable for liberals to see O-Care struggle in the near term, since that’ll create leverage for the public option or something even more aggressive as a “fix”? Problems with ObamaCare are a major political headache for Democrats, but they’re necessary from a long-term perspective to build momentum for further glorious Change. 2014 is shaping up to be … not so good for them, but if their fortunes reverse and they win big two years after that, they’ll be well-positioned to make needed “repairs.”

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Jazz Shaw 9:20 AM | April 19, 2024
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