Employers cut health coverage, find scapegoat: Obamacare
If there’s been one inexorable trend coming out of the HR departments of major employers, it’s been the steady erosion of worker pay and benefits. Razor-thin raises, defined benefit pensions replaced by 401(k) plans, shrinking healthcare--if you’ve been on a big company’s payroll, you know the drill.
Expect the trend to continue or even pick up steam, because employers have an ideal scapegoat right now: the Affordable Care Act. It looks like the blame-Obamacare game is having some effect. According to an AP poll released over the weekend, three-quarters of those with private or employer-based insurance think the Affordable Care Act is the reason for changes in their health coverage for 2014.
Some companies have been blaming the act for forcing them to roll back health coverage if it exceeds “Cadillac plan” standards. This is curious, because the employer tax on Cadillac plans, which is getting fingered as the culprit, doesn’t start until 2018. If your company is cutting back your benefits now, it’s because it wants to cut its payroll costs, period.
Stagnation in pay and cutbacks in other benefits? If you’re a big employer, you can blame those on the “uncertainty” of your healthcare costs thanks to, you know, Obamacare.
“Soon, Obamacare will get the blame for your kid’s acne,” is how Kevin Drum of Mother Jones interprets the trend.
To be fair, it isn’t entirely clear that employees see Obamacare exclusively as the reason for the benefit cutbacks. In the AP poll, 21% of respondents with private or employer coverage said their benefits were expanding next year--that’s much more likely than a cutback to be the result of the act.
As for the negative changes, which include higher premiums, co-pays and deductibles, they’ve all been happening for more than a decade. Nor are there any signs that the Affordable Care Act has accelerated the trend.
In premiums, for instance, employer plans have experienced some of their smallest annual increases since the act’s enactment in 2010. In 2013, the average premium increase in employer plans was 3.85%. That’s half the average increase since 1999, and a fraction of the repeated double-digit percentage increases that hit employer plans from 2001 to 2005. The figures come from the Kaiser Family Foundation’s annual survey of employer health benefits, 2013 edition.
The survey also documents the long-term rise in deductibles, co-pays and employee premium share. The percentage of employees whose plans charge deductibles of $1,000 or more per person has risen from 10% to 38% since 2006; those facing deductibles of $2,000 or more have risen from 3% to 15%. (The trend is even more pronounced for workers in small firms, defined as those with up to 199 employees.)
Co-pays have been going up: The percentage of workers required to pay $40 per primary care office visit has risen from 7% to 21% since 2006.
If employees really do see Obamacare as the cause of all this, it’s hard to understand why. Any workers who haven’t detected the trend in real time must have been tossing their HR circulars in the trash for a decade. Are there really many employees who haven’t noticed a bigger bite for premiums during their open enrollment periods, or at the latest when they receive their first paycheck of the new year?
It’s possible they’re responding to fear tactics by their employers--warnings that things are only going to get tighter because of government healthcare policy. But wise employees knows to take such claims with a grain of salt, because they’ve been feeling the squeeze for years.