Is it possible that the health care reform legislation recently signed into law will actually make it harder for employees to get coverage from their workplace? That’s what some businesses are claiming, as CNN reports:
Critics say removing the subsidy will deter employers from providing full health care benefits, which would force more workers to rely on Medicare and end up shifting the cost to the public sector. "The government will soon find out that by raising the cost for these companies they're incenting employers to drop these plans and send their employees into the Medicare program," said [U.S. Chamber of Commerce] spokeswoman Blair Latoff.
The issue is centered around tax deductions for Medicare prescription drug subsidies. The new law eliminates these deductions, though it retains the subsidies that employers have been writing off. The White House says this simply eliminates a loophole that was allowing companies to “double dip”—that is, take one deduction for their Medicare contribution, and a second one for the subsidy.
The Chamber, in a letter sent to Congress, said the fallout could hinder economic recovery, causing employers to stall hiring plans and cut benefits.
Whatever happens with the subsidy, employers are bracing for big changes with the new legislation. Just understanding the basics of a law that encourages employers to provide health care without actually mandating it is hard enough, though the Employment Law Post has a good summation:
Although the health care reform package doesn’t require employers to provide insurance coverage to their employees, it will penalize employers that don’t offer coverage or don’t offer coverage that is considered good enough. For example, employers with 50 or more full-time equivalent employees that don’t offer coverage will have to pay an assessment ($2,000 for each full-time employee) to help offset the cost of health insurance if their employees are receiving help from the federal government to purchase insurance. Employers that offer coverage may also face penalties if their employees are receiving federal subsidies.
Beyond that, there are several reforms that will go into effect in different years: the elimination of the Medicare subsidy, for instance, won’t happen until 2013; the prohibition on denying coverage for pre-existing conditions goes into effect in 2014, along with a ban on annual limits for coverage.
The biggest question of all for health insurance in the workplace after these reforms is: will it go away completely? Over at CNBC, John Harwood writes that the new legislation could completely change the insurance market, since it requires private citizens to make sure they are covered, the same way they would with auto insurance.
The market for employer-provided health insurance flourished after federal policy made benefits tax free during World War II. Mr. Obama’s proposal, to minimize disruption and political resistance, was designed to leave that system mostly in place. But over time, growth in the individual marketplace could reduce the role of employer provided health insurance, which has weighed down corporate bottom lines as health costs exploded in recent decades.
In the meantime, if you’re feeling overwhelmed trying to understand the implications of the health care legislation for yourself or your business, this USA Today article shows you’re not alone.
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