Let’s get this out of the way right up front: I feel like a guy who’s continually making excuses for a friend who repeatedly messes up.
For supporters (such as myself) of the 2010 Patient Protection and Affordable Care Act, better known as Obamacare, Friday presented another occasion to make excuses. This time it was the stunning news that Anthem Blue Cross will not offer group plans to small employers through a new, subsidized marketplace being set up by Covered California -- at least not in the exchange’s first year.
Unlike the two insurers who’d previously said they were staying out of Covered California’s new exchange for individual buyers, Anthem is a major player in the market for small group coverage. According to my colleague Chad Terhune, Anthem was the leading provider of coverage to small businesses in 2011, writing nearly one-third of the policies.
Nevertheless, the development looks worse than it really is. As far as workers are concerned, Anthem’s decision not to offer policies through the exchange shouldn’t make a difference. It won’t help Covered California’s marketplace for small businesses, which won’t benefit from as much competition. But small businesses can still shop for policies directly or through a preexisting exchange, called CaliforniaChoice, that lets them offer their workers multiple options for coverage.
Covered California offers something unique to businesses with up to 25 low- and moderate-income employees: tax credits that offset part of the cost of offering insurance for two years. The amount of the credit depends on the size of the company and the average wages paid. Although that tax credit was available as early as 2010, starting in January it can be claimed only by businesses that purchase coverage through the exchange. So far, though, relatively few businesses have sought the credit, either because the provisions are confusing or because health insurance is too costly for qualified employers to provide even with the tax break.
Micah Weinberg, a senior policy advisor for the Bay Area Council, said Anthem’s decision not to participate was “a big issue” for Covered California’s small-business exchange. “Other than the tax credits, there’s nothing really that [Covered California] offers that they can’t get elsewhere. And now it has fewer choices of plans,” Weinberg said.
From Anthem’s perspective, Covered California may simply have been a more costly way to sell policies than to continue marketing them directly to businesses. And with apparently little interest in the tax credits, Anthem may have concluded that the number of potential customers at the exchange was too low to be worth the cost.
For small businesses, not having Anthem in the exchange means less choice of plans, but just in that one venue. Granted, Covered California will be the only place to obtain the tax credits, so the result may be fewer small businesses deciding to start offering coverage. That won’t be a step backward, though, just not a step forward.
Ultimately, what matters is how many Americans have insurance, not how many employers provide it. And oddly enough, the subsidies provided in the law could make coverage less expensive for lower-income workers shopping as individuals than as members of a small group plan. That’s because the tax credits for individuals earning less than three times the federal poverty line can leave them with smaller premiums than their employers can require them to pay.
In other words, if Anthem’s stance results in fewer employers offering coverage, that may actually make it easier for low-wage workers to obtain coverage. That perverse result is another illustration of a point I’ve made before, which is that lawmakers should have severed the country’s dependence on employer-provided coverage instead of leveraging it in their bid to achieve universal health insurance.
Again, I’m not arguing that Anthem’s move is welcome or beneficial. I’m just saying, as with so many of the setbacks faced by Obamacare this year, that it’s not as bad as it looks. At least not to those of us making excuses.
Follow Jon Healey on Twitter @jcahealey