Are You Ready for the ACA?
I wanted to share this great perspective on health care reform offered in an article by Casey Mulligan in The New York Times Economix section this week. Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”
The article is very timely as we near the deadlines of the ACA. There’s been so much talk about how the ACA will benefit the under-insured or how the ACA will bankrupt small business, but truly no one has given a perspective on the currently employed and insured. What does this change if anything for that individual? In fact once again, you could say that the working wealthy or the upscale middle income families may get lost in the shuffle
The Working Class May Pay More in Taxes
Mulligan sites a dilemma. Employees who may not be covered already through their employers and who are low to middle income, will receive subsidies to purchase coverage through one of the insurance “exchanges.” Conversely, many employers will decide to drop insurance coverage for their higher-income employees. But those employees will not qualify fro subsidies. The author states:
Beginning next year, states and the federal government intend to create opportunities for families to purchase health insurance, separate from their employers, through insurance “exchanges” in the states. Most important, middle- and low-income families may qualify for valuable federal subsidies that will serve to reduce premiums and out-of-pocket health costs.
To qualify for subsidized exchange plans, workers cannot be offered affordable insurance by their employers. Paradoxically, employers will create subsidy opportunities for their middle- and low-income employees whenever they fail to offer health insurance.
On the other hand, an employer dropping its health insurance next year will put its high-income employees in a tough spot, because they will have to buy insurance on their own without the tax advantages .
Business as Usual or a Giant Game Changer?
Mulligan predicts that in a number of industries, health insurance will be a giant game changer and may even level the competition. While in other industries, business will proceed as usual. A couple of industries like accommodation and food services may experience the biggest impact both from employers dropping coverage and/or hours and from the IRS because these same employees don’t qualify as low income. Unfortunately nothing has been tested. So no one really knows. But historically a one-size fits all approach in the United States of America, where Capitalism and competition thrive, is never a good thing. This may be the reason for all of the revisions, provisions and explanations put out in recent months including the designation of metal tiers so people understand the coverage levels.
Something tells me we may be doing a lot of Monday morning quarter-backing in 2015 when we reflect on what worked in health care reform and what is not working. But, let’s consider this for one moment. If in an effort to compensate the under-insured and disadvantaged, we also knock down a peg the working wealthy, aren’t we creating more problems not less? It’s just speculation. What do you think?