Bulls-eye. Target, one of the nation’s largest retail companies, just announced its decision to drop coverage for their part-time employees. For workers losing their coverage, they’ll get a $500 contribution toward new coverage. Under Obamacare, part-time employees are defined as those who work 30 hours or less each week. Target officials also cited low participation in their health plans among these employees and the fact that these workers can also get subsidies for health insurance in the exchange.
Target’s decision follows those of other giants. Trader Joe’s food chain, which offered very good health insurance coverage to its part-time employees, has already discontinued it. So, did Home Depot. Americans can expect the next wave of cancellations and coverage losses to occur in the group markets, and part-time employees are not the only ones who face uncertainty. In contrast to the President’s repeated promises, insurance costs are increasing, not decreasing, and turmoil will continue. With new benefit mandates and costly regulations, employers must do what is necessary to stay in business and try to hold onto as many of their employees as they can, while complying with the health law.
Many of the Target employees who have just lost their coverage will doubtless try to navigate the troubled government website to enroll in the exchanges, and hope that Obama Administration officials will be able to fix the website’s “back-end” capacity to transmit accurate enrollment information to insurance companies. Otherwise, these workers and their families could only be enrolled in theory, but not in fact, and thus remain uninsured.
Persons’ fortunes under Obamacare will vary. Low-income workers are consigned to Medicaid, which has a poor record of health care delivery. For those eligible to purchase coverage in the exchange, it is predicted that premiums will be much higher. Whether or not they are eligible for taxpayer subsidies to offset their premium costs is a function of their income. Single persons with annual incomes between slightly more than $11,000 and roughly $46,000 are eligible for premium subsidies, and many will also be eligible for extra subsidies to offset their out-of-pocket costs or deductibles. But, paradoxically, the lowest cost plans, the bronze plans or the catastrophic plans, don’t qualify for such subsidies, and provider networks are normally narrow. And persons with an income above $46,000, a true middle income worker, are not eligible for assistance, even though they may have just lost their employer’s tax free insurance contribution.
For working Americans more trouble is on the way. Employers with 50 or more full time employees are subject to the employer mandate penalties next year. So, many businesses have a powerful incentive to shift employees to part-time status wherever possible to insulate themselves from both the cost of coverage and the mandate penalty. Part time employees may be the most vulnerable right now, but uncertainty will grip ever larger cohorts of the American workforce, including middle class Americans who have good group insurance coverage today.
One sure loser is the taxpayer, who is paying higher taxes and higher premiums, as well as subsidizing health insurance for persons who have lost employer-based coverage. The more employees who are dropped into the exchanges, the bigger the taxpayer costs for subsidies will be. Washington’s ruling class may think taxpayers’ pockets are infinitely deep, the reality is that their unwieldy law is as unaffordable as it is unfair. Welcome to 2014.