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Does Obamacare cut out spouses?

By Jay MacDonald ·
Tuesday, August 27, 2013
Posted: 6 am ET

It didn't take long for opponents of health care reform to light up Facebook last week following the announcement by shipping giant United Parcel Service that it plans to cut from its employee health plan thousands of working spouses who are eligible for coverage through their own employer.

Employers pin some blame on Obamacare

According to Kaiser Health News, UPS issued a memo to employees that rising health insurance costs, "combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost."

The University of Virginia made a similar announcement last week, stating that beginning next year, it will no longer offer health coverage to spouses who have access to a "minimum value" and "affordable" coverage, as defined under health care reform.

UVA spokesman McGregor McCance told The (Charlottesville) Daily Progress that the move was necessary to rein in growing medical costs and allow the university to focus on preventive care for its employees. Total medical claims at the university grew 28 percent, from $99 million to $127 million, between 2008 and 2012. Administrators are braced for costs to rise 6.8 percent next year, including by $7 million to implement health care reform.

UPS spokesman Andy McGowan said the Affordable Care Act is "one of the reasons that UPS is implementing the changes." The company singled out the expense of two provisions of the ACA: a research fee of $1 per plan member (it eventually rises to $2); and a temporary fee of $63 per member that goes toward stabilizing the new state health marketplaces.

Announcements meet some skepticism

But experts like MIT health economist Jonathan Gruber point out that the ACA has relatively little impact on the health care costs of large employers, many of whom are self-insured.

"The notion that those (spousal moves) are going to be make-or-break when (the employers) are otherwise absorbing 7 (percent) to 10 percent a year (in broader health-cost increases) is kind of ridiculous," Gruber told KHN. "Nobody expected the ACA to have a major effect on health costs for large firms."

A survey of employers by research firm Towers Watson found that just 4 percent of employers refuse spouses who are eligible for coverage elsewhere, while 8 percent are considering the move in the coming year.

Tracy Watts, national health care reform leader at Mercer, a global research and consulting firm, says such moves, while still rare, reflect a growing trend among some large employers.

'Kitchen table' conversations

"A lot of employers are really increasing the amount that an employee has to pay for employee-plus-spouse or employee-plus-family coverage," Watts says. "The idea is, when you and your spouse sit down and compare plans at the kitchen table during open enrollment, employers are now starting to think they want the spouses to go to their own plan."

In fact, Watts say some companies are trimming their plans to bare bones precisely to avoid winning that kitchen-table comparison.

"The richer (an employer's) benefits and the more they subsidize them, they're going to be a magnet for those spouses and dependents. Right now, you might have people opting out and going with a spouse's plan but, depending on how much you change your benefits for 2014, some people might come back in," Watts says.

What do you think? Is Obamacare the cause or the potential cure for this latest twist in employer-based health plans?

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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.

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Glen L Wallace
March 20, 2014 at 10:32 pm

Liberals can keep making excuses for Obamacare and keep saying "yes, but....." every time something negative is exposed, but the truth IS Obamacare is an ill conceived,idiotically written, and even more idiotically implemented, non -workable disaster. Deep down in your heart , you know it. Otherwise, you ARE a complete idiot , instead of just sounding like one.

R. Allen
October 29, 2013 at 12:05 pm

The Affordable Care Act will never survive as it is written. It will force the conversation necessary to arrive at a workable solution, however the process will be painful. The need however is to reverse this sentiment that the government is better suited to run everything. History has proven that the government is only good at growing mismanagement. The most efficient model is where the government is kept to a minimum and where the business model of competition keeps things in check. Granted, this is not fair to everyone, but the leftist model where the government protects everyone from themselves will rapidly increase the growth of the lord and serdom state.

Mc Hammer
October 22, 2013 at 5:25 pm

It is a Globalist approach we are seeing. If I run my company and use all offshore personnel then why would I need to have any healthcare costs? Ship the jobs and the bills overseas to those well run healthcare geniuses.