Those are just some of the wild-eyed claims buzzing around the Affordable Care Act and its implementation. Consider this lede from Friday’s Associated Press: “It’s called the Affordable Care Act, but President Barack Obama’s health care law may turn out to be unaffordable for many low-wage workers, including employees at big chain restaurants, retail stores and hotels.” The article argues that several “wrinkles” in the law could hurt the very Americans it intended to help:
Because of a wrinkle in the law, companies can meet their legal obligations by offering policies that would be too expensive for many low-wage workers. For the employee, it’s like a mirage — attractive but out of reach.
The company can get off the hook, say corporate consultants and policy experts, but the employee could still face a federal requirement to get health insurance.
Many are expected to remain uninsured, possibly risking fines. That’s due to another provision: the law says workers with an offer of “affordable” workplace coverage aren’t entitled to new tax credits for private insurance, which could be a better deal for those on the lower rungs of the middle class.
Some supporters of the law are disappointed. It smacks of today’s Catch-22 insurance rules.
But skip down to the end of the piece and you’ll find a curious quote from Neil Trautwein of the National Retail Federation, which represents the very employers the AP claims are going to take advantage of the health law’s impurities to increase health care costs for low-income workers while avoiding its penalties.
He appears to disagree entirely with the AP’s premise, telling the wire service that there is no “grand scheme to avoid responsibility.” ThinkProgress spoke with Trautwein, who stressed that “it is manifestly not in [employers'] interest to try to choose a benefit level that is beyond their employees’ means. No good comes of it.”
“There is the opportunity, and I’d argue the incentive, for employers to make sure that more of their employees can afford the coverage they offer,” he added, pointing to a provision of the law that requires large employers that don’t provide adequate insurance coverage (the policy has to cover at least 60 percent of health care costs) to pay a fee of $2,000 per employee after the first thirty workers. Businesses would also be assessed a penalty if they offer unaffordable coverage that forces employees to spend more than 9.5 percent of income on insurance. In that case, the employee can apply for government subsidized coverage in the exchanges and the employer pays another fine.
These penalties are designed to encourage employers to provide relatively affordable coverage and each company will have to strike the right balance of cost and benefit. But the AP, citing “corporate consultants and policy experts,” argues that businesses will find a sweet spot in offering workers expensive insurance that does not cross the affordability threshold and qualifies employees for premium assistance.
The article doesn’t actually quote any businesses that are moving in this direction — it merely speculates that they could. “A lot of this is being driven by the employer consultant trying to figure out ways to exploit loopholes — it’s not necessarily the employers coming up with these ideas on their own,” Edwin Park, Vice President for Health Policy at the Center on Budget and Policy Priorities, explained. “They come up with something that’s different form the status quo, different from what employers would think about complying with regulatory requirements — they’re able to drum up business.” Park said that most employers who employ more than 50 employees “already offer coverage and that coverage is an excess of the minimum value test and is already affordable.” According to a 2011 report from the Department of Health and Human Services, only “1.6 to 2.0 percent of individuals covered by employer-sponsored insurance (ESI) — approximately 2.6 to 3.2 million individuals — are estimated to be enrolled in plans” that are so skimpy that they are outlawed by the ACA rules.
“I don’t think there is a trend” of employers exploiting the law to offer very expensive coverage, Trautwein said. “It’s vastly too Machiavellian to suggest that employers are out to do ill to their employees. We still have the need to get the right employees in.” The AP’s consultants, however, disagree.