“This saves the company some money, and to the extent that workers who were getting coverage now get subsidies (which will depend on their incomes and to some extent their ages), they are pushing some of their costs on to the federal taxpayer,” says Yuval Levin, a former Bush administration official and much-read analyst of Obamacare.
Perhaps more importantly, though, Obamacare could be creating a two-tier system inside the employer-based system. Good coverage is still a benefit, and companies will include it as part of the compensation packages it offers the most sought-after workers. But employees lower down the ladder? Not so much.
“The employer offering of health insurance will be more and more tied to attracting high-value workers,” says Bob Laszewski, a respected health care industry expert. “Employers who employ a lot of lower-paid unskilled (like Target) will more often eliminate benefits and send them to the exchanges. Employers who employ a lot of highly skilled and harder-to-recruit workers will more often maintain benefits.”
And that doesn’t mean just part-time employees. Obamacare could affect health coverage for millions of Americans who didn’t think they would be affected.
Until Jan. 1, Laszewski notes, “the only place a company’s workers could get quality, guaranteed issue health insurance at group rates was at the employer.” Companies that canceled coverage were essentially throwing workers out on the street.
That’s no longer the case. “Now, the employer can back away,” says Laszewski. “Particularly for lower-paid workers, the Obamacare subsidies approximate, or even better, a typical employer contribution.”
From a company’s standpoint, what’s not to like? If the company has less than 50 employees, it can stop paying for the health coverage of its lower-end workers -- actually, of all its workers, if it chooses -- and let the taxpayers pick up the tab. Even if the company has more than 50 workers, and can’t find a way out of paying the big-employer penalty for not providing coverage, it can drop coverage, pay the fine, and still likely come out ahead.