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Employer Mandate Delayed, But Obamacare Destruction Goes On

By Sally C. Pipes

Some 60 percent of Americans –– nearly 160 million people –– get insurance through their jobs. Thanks to Obamacare, that number is about to nosedive.

The president’s signature law is hiking the cost of health insurance for American businesses of all sizes. They’re responding by dumping coverage for workers, spouses, and retirees.

Even though the employer man­date, which requires all firms with 50 or more full-time staffers to pro­vide health coverage or pay a fine, has been delayed by one year, the employer health insurance market is slowly bleeding out.

A few weeks ago, 30,000 grocery workers in Washington state threat­ened to go on strike after several supermarket chains announced plans to drop health benefits for part-time workers.

Today, workers who put in as few as 16 hours are eligible for health coverage. But the stores say that they won’t be able to afford cover­age for part-timers once the em­ployer mandate kicks in on January 1, 2015.

That’s not surprising. Average annual employer-sponsored individ­ual health insurance premiums are up 5 percent this year compared to 2012 — to more than $5,800. The average employer premium for a family of four is north of $16,000.

In September, Home Depot announced plans to drop coverage for roughly 20,000 part-time work­ers. They’ll have to shop for insur­ance in Obamacare’s exchanges –– which are barely operational despite officially opening for business October 1.

Part-timers at Trader Joe’s, Wegmans, and Universal Orlando will have to do the same.

They won’t be alone. A National Business Group on Health survey found that one-fifth of big compa­nies think their currently covered part-time workers could end up in the exchanges next year.

Obamacare is even taking away the benefits of full-time workers –– by encouraging their employers to cut their hours and rechristen them as part-timers.

The law defines “full-time” as working 30 or more hours per week. So many firms are carefully watch­ing their employees’ hours to ensure that they don’t cross that threshold.

Clothing retailer Forever 21 re­vealed in August that it would reduce hours and change some full-timers to part-timers. SeaWorld now limits part-timers to 28 hours per week –– rather than 32, as before.

A survey conducted by the non­profit International Foundation of Employee Benefit Plans found that 15 percent of employers subject to the mandate planned to cut hours in order to reduce the number of peo­ple they’d have to cover.

Spouses also are learning firsthand how Obamacare will destabilize their families’ benefits.

In August, shipping giant UPS said that it would drop coverage for about 15,000 spouses who have ac­cess to benefits at their own jobs. The reason? “Costs associated with the Affordable Care Act,” the com­pany said.

According to a Towers Watson survey, 12 percent of employers plan to drop coverage for spouses next year, up from 4 percent this year.

Retirees, too, will increasingly find themselves pushed into Obamacare’s exchanges. Consulting firm Aon Hewitt found that nearly two-thirds of the companies it sur­veyed plan to “review their retiree health care strategy in light of health care reform.”

To fight back against Obamacare-fueled cost increases, many compa­nies are turning to consumer-directed health plans, which typi­cally pair low-premium, high-deductible policies with tax-advantaged Health Savings Accounts (HSAs).

These plans empower patients to take control of their care. They can save money tax-free in their HSAs and use the proceeds for co-payments and other out-of-pocket costs. The high-deductible policy, meanwhile, protects them in the event of a medical catastrophe.

And because patients actually own their healthcare dollars, they have strong incentives to spend wisely. That dose of market discipline helps lower overall health costs.

About one in five workers was enrolled in an HSA plan this year, according to the Kaiser Family Foundation, up from zero in 2005. HSAs are now the second-most popular employer-provided plan. Aon Hewitt says that they could become the leader within three to five years.

Unfortunately, Obamacare at­tempts to squash this consumer-directed approach by capping de­ductibles and requiring all policies to cover a wide array of expensive benefits. The law’s supporters claim that its rules will ensure that patients get high-quality coverage.

But as the turmoil in the em­ployer-sponsored insurance market demonstrates, Obamacare may in­stead ensure that Americans get no coverage at all.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute.