Déjà vu on employers and ACA
Today's Boston Globe off-lead story, Mass. firms mull cuts in health benefits, reminds me of a song.
Or perhaps songs. For me, it's Déjà Vu by Crosby, Stills, Nash & Young, one of the first records I ever bought. For others, it might be a different Déjà Vu, maybe by Beyoncé (with Jay Z). Or perhaps Eminem, or Dionne Warwick.
Today's story claims that health reform may somehow hurt employer-provided health coverage. We heard the same fears 7 years ago, as Chapter 58 was being debated. Yet following the passage of Massachusetts health reform, employers embraced their role under shared responsibility and increased offers of coverage to their workers. Employment in Massachusetts was not affected by health reform.
In today's article, the evidence of a detrimental impact is weak. The article claims that reform may decrease worker's hours, as employers move more workers to part-time schedules. The evidence is, well, one company, retailer Forever 21, reducing hours. The company denies that the ACA had anything to do with its decision. More importantly, a careful independent economic analysis by the Federal Reserve Bank of San Francisco looks at the actual evidence. The study concludes it's the slow recovery that is increasing part-time work. And the impact of the ACA?
In any event, both the impact of the law [the ACA] so far and the ultimate effect are likely to be small. Before the law was passed, most large employers already faced IRS rules that prevented them from denying available health benefits to full-time workers. These rules gave employers an incentive to create part-time jobs to avoid rising health benefit costs. Moreover, recent research suggests that the ultimate increase in the incidence of part-time work when the ACA provisions are fully implemented is likely to be small, on the order of a 1 to 2 percentage point increase or less (Graham-Squire and Jacobs 2013). This is consistent with the example of Hawaii, where part-time work increased only slightly in the two decades following enforcement of the state’s employer health-care mandate (Buchmueller, DiNardo, and Valletta 2011).
Another fear is that spousal coverage will scaled back. The evidence in the story is, again, just one company, UPS. But companies were reducing spousal coverage long before the ACA passed. For UPS, the new rule applies only to spouses who have an offer of coverage from their job, so insurance will still be available to those cut off by UPS. Employee benefits experts were skeptical that the ACA had any impact on the decision, and Bloomberg's business editors wrote UPS might be "using the health-care law as a smokescreen for cutting costs it wanted to cut anyway."
Despite a headline proclaiming "Mass. firms mull cuts in health benefits," the story doesn't evince a single Massachusetts company that is considering reducing their benefits. The only Massachusetts firm identified in the article is Framingham-based Cumberland Gulf Group, which owns the Cumberland Farms stores and Massachusetts Gulf Oil gas stations. And they're increasing coverage for their workers, in order to retain workers longer and improve customer satisfaction, ultimately increasing their bottom line.
This summer, Governor Patrick pledged to carefully monitor employer coverage in Massachusetts as we move away from the Chapter 58 framework to that of the ACA. Policymakers should be ready to make adjustments if workers begin losing coverage. But today's headline made me feel, in the words of the song, we have all been here before.