‘Spousal Cutouts’ Becoming More Common Because of Obamacare
February 23, 2013 - 10:34 am
We should invent a new theorem to describe the bizarre stupidity of Obamacare.Like the Peter Principle,the Dilbert Principle, or Murphy’s Law, or Parkinson’s Law, the Obamacare Theorem will take its place in our culture as a general rule of applied philosophy:
The number of unintended consequences in any government program is directly proportional to the number of lies told in order to get it passed.
We’ve lost track of all the things we didn’t know that was in Obamacare when Nancy Pelosi blithely told us we had to pass the bill in order to find out what was in it. But the real damage being done by the Affordable Care Act are the unintended consequences of the law.
No one who supported the bill wanted businesses to drop their employee health coverage en masse. But it appears that a still unknown percentage will. Supporters thought that most states would set up and run the insurance exchanges mandated by the bill. Most won’t. Backers of the ACA believed it would cut health insurance costs. Costs will rise up to 50% for some Americans.
Lost jobs, moving employees to part time from full time work — the list goes on and on. Add to all of that, the surprising move by employers to cut spouses from their employee health plans. Called “spousal cutouts,” it is a growing trend among large companies and threatens to significantly increase the cost of insurance for the average family.
While surcharges for spousal coverage are more common, last year, 6% of large employers excluded spouses, up from 5% in 2010, as did 4% of huge companies with at least 20,000 employees, twice as many as in 2010, according to human resources firm Mercer. These “spousal carve-outs,” or “working spouse provisions,” generally prohibit only people who could get coverage through their own job from enrolling in their spouse’s plan.
Such exclusions barely existed three years ago, but experts expect an increasing number of employers to adopt them: “That’s the next step,” Darling says. HMS, a company that audits plans for employers, estimates that nearly a third of companies might have such policies now. Holdouts say they feel under pressure to follow suit. “We’re the last domino,” says Duke Bennett, mayor of Terre Haute, Ind., which is instituting a spousal carve-out for the city’s health plan, effective July 2013, after nearly all major employers in the area dropped spouses.
But when employers drop spouses, they often lose more than just the one individual, when couples choose instead to seek coverage together under the other partner’s employer. Terre Haute, which pays $6 million annually to insure nearly 1,200 people including employees and their family members, received more than 20 new plan members when a local university, bank and county government stopped insuring spouses, according to Bennett. “We have a great plan, so they want to be on ours. All we’re trying to do is level the playing field here,” he says.
While couples generally prefer to be on the same health plan, companies often find that spouses are more expensive to insure than their own employees. That’s because, say benefits experts, covered spouses tend to be women, who as a group not only spend more on health care, but also have more free time to go to the doctor if they don’t work. Indeed, JetBlue’s covered spouses cost 50% more than crew members themselves, according to the airline’s online Q&A about its health plan, which this year extended wellness incentives to spouses for the first time.
A big reason to drop spouses from coverage are new fees resulting from implementation of Obamacare:
By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26).
There are probably some of you who think these “unintended consequences” weren’t unintended at all. Perhaps some of these consequences were foreseen — businesses dropping their health care plans, for example, although it appears that the staggering number who may do it was unexpected — and were designed to force the eventual passage of a single payer system. But given the mass confusion attending the passage of this bill, I really don’t see how that is possible. Pelosi wasn’t being facetious when she said we had to pass Obamacare to find out what was in it. The bill was pulled together from several different sources at the last minute, and was still being written after it had been passed. Such a set of circumstances does not lend itself to planting bombs set to detonate once the bill was passed.
Then there’s the matter of regulation and how the bureaucrats are interpreting what Congress wrought. We are still waiting for hundreds of new regulations, many of which I’m sure will surprise us with how they impact insurance rates and coverage, as well as employer participation.
It is beyond belief that lawmakers could be so irresponsible. We will probably be dealing with consequences related to Obamacare for the next decade — unless the American people demand its repeal.