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Friday, October 10, 2014

Affordable Care Act costs cause Walmart to drop coverage for 30,000 part-time employees

Back in 2011, Doug Henwood of the Left Business Observer argued that Obamacare, the Affordable Care Act, would result in some employers dropping their existing coverage and forcing employers onto the exchanges.



Henwood's original article can be found here. Paul Krugman, the well-known liberal economist, argued that this would not happen, and criticised a survey that predicted this would occur. Relying on another source Krugman suggests that the survey is not a reliable predictor of what will happen since most of the participants who answered the questionaire did not know how much on average they spent on health care per full-time employee: When asked how much their companies spend on medical and prescription drug benefits per full-time employee – something you might expect a health benefit pro to be intimately familiar with – 58.3% said they didn’t know. While this is correct, Henwood points out some neglected aspects in the criticism. The question was actually somewhat more complicated than described in the quote but even more telling only about 10 per cent of the respondents were health benefit pros. However, they are still quite capable of judging that they will be spending more under Obamacare.
Recent news reports in the Wall Street Journal support Henwood's prediction. Wal-Mart is both cutting coverage for 30,000 part-time workers--or associates as Walmart calls them--and also raising premiums for others. The moves are designed to contain costs as a result of the Affordable Care Act. Many companies are shifting more of their costs onto their employees. Wal-Mart with 1.4 million "associates" predicts that its health care costs will rise $500 million more than it had predicted for the year ending this coming January. Sally Welborn, senior vice president of global benefits said that the company had to keep its eye on costs but would not say how much Wal-Mart expected to save by its moves. Beginning in 2015 Obamacare will require large companies to provide health care coverage for most of their employees who work at least 30 hours per week or pay a penalty starting at 2,000 per worker. However, many companies are finding it cheaper to simply pay the penalty than provide the coverage. Individual employers are then forced to purchase coverage on government exchanges.
 Walmart is not the only corporation to join in the parade to drop coverage. Target has said it would stop offering benefits to part-time workers. Home Depot also ended coverage for 20,000 part-time workers. No doubt Obamacare does have some positive features. For instance, many more Americans now have health insurance when they had none before.
 Nevertheless Obamacare so criticized by the right wing is actually a conservative's dream and based upon conservative principles as an article by a fellow of the American Enterprise Institute in the New York Times points out: The plan has few champions on the left precisely because it is not a government takeover of health care. It is not a single-payer system, nor “Medicare for all”; it does not include a “public option,” a health plan offered by a federal insurer. It is a ratification of market ideas, modified to address problems unique to health insurance. Yet, Obamacare is defended by many of the liberal left including Krugman no doubt as the lesser evil compared to what the Republicans might do.
According to Obama the Affordable Care Act is a great example of legislation not moulded by special interests as he claimed just after passge of the act: “Tonight, we pushed back on the undue influence of special interests. … We proved that this government — a government of the people and by the people — still works for the people.” Even before he spoke the Pharmaceutical Researchers and Manufacturers of America also hailed the health bill as important and historic. A Wall Street Journal blog hailed the act as a great opportunity for investors. Among the big winners are not only health care providers and pharmaceutical companies but the big health insurance companies as well, as even Forbes notes as well as others. Far from showing that the Obama administration can push back against undue influence of special interests, the Affordable Care Act shows the exact opposite.
The defender of the single payer system in the appended video is incorrect when he speaks of their being no co-pays at least in many systems. "Reforms" are constantly degrading existing universal systems with less coverage and increased co-pays to shift costs from the government onto the individual, although the Canadian system does not allow co-pays.

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