Businesses Changing Their Health Insurance Coverage

I noticed a short while ago the rage at Forever 21 (for example, http://monkeypipestudios.tumblr.com/post/58460642862/hbreckel-ladylaguna-mazarinedrake), for changing their staffing levels by cutting certain employee hours to 29.5 or less per week as a result of a review of their operating costs. Although it impacts (only) 196 employees, less than 1% of the workforce, this is seen as a compromise based on the Affordable Care Act (ACA).

In April, Regal Entertainment Group (http://www.nydailynews.com/news/politics/companies-cut-worker-hours-avoid-obamacare-report-article-1.1333305), the largest chain of movie theatres in the US, cut the hours of “many workers” who are non-salaried (I can’t find an exact number) to 30 hours per week. They stated in their press release that it was directly related to the costs of the ACA.

Today (8-22-13) it was announced that UPS (http://www.nytimes.com/2013/08/22/business/ups-to-end-health-benefits-for-spouses-of-some-workers.html) was cutting the coverage for healthcare of white-collar employees, who are able to get coverage through their own employers. This will affect about 15,000 spouses of the 33,000 currently covered in that group. It will not affect children of the employees. This also was attributed to healthcare costs directly related to “the federal program”.

On 8-21-13, the University of Virginia (http://freebeacon.com/university-of-virginia-drops-spouses-health-coverage-due-to-obamacare/) announced that they were cutting health insurance costs by up to $7.3 million by dropping coverage for employee spouses who could obtain it through their own employer. This is claimed to be directly in response to anticipated costs of the ACA to the University in 2014.

I’ll quote this article (http://www.mckinsey.com/insights/health_systems_and_services/how_us_health_care_reform_will_affect_employee_benefits) from McKinsey (a very large management consulting firm): as “we have seen, a Congressional Budget Office report estimated that only 9 million to 10 million people, or about 7 percent of employees, currently covered by employer-sponsored insurance (ESI) would have to switch to subsidized exchange policies in 2014. Most surveys of employers likewise show relatively low interest in shifting employees from traditional ESI.

Our survey found, however, that 45 to 50 percent of employers say they will definitely or probably pursue alternatives to ESI in the years after 2014. Those alternatives include dropping coverage, offering it through a defined-contribution model, or in effect offering it only to certain employees. More than 30 percent of employers overall, and 28 percent of large ones, say they will definitely or probably drop coverage after 2014.”

My gut tells me that we’ll see more companies assessing their budgets, notably in the area of healthcare premiums anticipated vs. having to pay tax penalties for not offering health insurance vs. more creative ways of offering employee health coverage (as it’s still a big draw in the aspect of a benefit). 

Other news articles (I’ve tried to pull them from all ends of the political spectrum, as this is something that has a lot of for or against to it. I think the McKinsey assessment is as close to neutral as I’ve seen):

Mother Jones (http://www.motherjones.com/mojo/2013/05/obamacare-cadillac-tax-high-end-health-plan)

NY Daily News-“Companies Cut Part-time Workers Hours” (http://www.nydailynews.com/news/politics/companies-cut-worker-hours-avoid-obamacare-report-article-1.1333305

Kiplinger-“Health Laws Impact on Employer Coverage” (http://www.kiplinger.com/article/insurance/T027-C000-S004-health-law-impact-on-employer-coverage.html)

Rochester City News-“Wegman’s Dropping Health Insurance for Part-timers” (http://www.rochestercitynewspaper.com/NewsBlog/archives/2013/07/11/buffalo-news-wegmans-dropping-health-insurance-for-part-timers)