Although Obamacare is not directly responsible for corporations cutting back and altering benefits for retirees, the law won’t do much to slow this trend. In fact, it could indirectly increase costs for companies that might, in turn, look to retiree benefits to cut spending. The law sets a minimum floor for what medical care health-insurance plans must cover. Although many corporate health-insurance plans were grandfathered in and exempted from complying with these requirements, the exemption disappears if companies make significant changes to their health-insurance offerings, which is common. Architects of the law say it will reduce the growth of overall U.S. health care spending and costs for individual medical treatments and procedures, which could reduce costs for employers, but it will be years or even decades before this promise can be evaluated on the merits.
And with the law’s public health-insurance exchanges scheduled to launch in just a few weeks, companies can point to them as viable alternatives to company-sponsored retiree coverage. Retirees in their late 50s and early 60s who don’t yet qualify for Medicare and are generally sicker than their younger counterparts currently face some of the highest health-insurance premiums in the individual marketplace. Under the ACA, insurers will no longer be able to charge these people higher rates based on health status, but the law does allow premiums to be set by age. Insurers will be able to charge the oldest enrollees in any given health plan three times as much as the youngest enrollees.