The Obamacare Dumping Effect
As Obamacare heads towards implementation, one critique of the law is its incentives for businesses to “dump” employees off of the employer’s health insurance plan and onto the federal or state health exchanges.
Via Sarah Kliff, Trader Joe’s is Exhibit A of this reality (emphasis added):
The ACA brings a new potential player into the arena for the acquisition of health care. Stated quite simply, the law is centered on providing low cost options to people who do not make a lot of money. Somewhat by definition, the law provides those people a pretty good deal for insurance … a deal that can’t be matched by us — or any company. However, an individual employee (we call them Crew Member) is only able to receive the tax credit from the exchanges under the act if we do not offer them insurance under our company plan.
Perhaps an example will help. A Crew Member called in the other day and was quite unhappy that she was being dropped from our coverage unless she worked more hours. She is a single mom with one child who makes $18 per hour and works about 25 hours per week. We ran the numbers for her. She currently pays $166.50 per month for her coverage with Trader Joe’s. Because of the tax credits under the ACA she can go to an exchange and purchase insurance that is almost identical to our plan for $69.59 per month. Accordingly, by going to the exchange she will save $1,175 each year … and that is before counting the $500 we will give her in January.
Notice the bolded section – tax subsidies are going to cover this employee’s insurance. And why wouldn’t Trader Joe’s take advantage of the ability to drop expenses? Cost-savings are always critical for businesses, especially in a terrible economy.
As we head into full Obamacare exchange implementation, more stories like this will be heard. The government’s unconstitutional and economically unsound interference in the health insurance market continues to push employers to make decisions that are good for them…and bad for the country.