The bad design of the employer mandate in the Affordable Care Act has led some businesses to look at cutting part-time employee’s work to just under the 30 hour threshold, but that is not the only loophole business could exploit. Because the new law does not apply the same standards to large businesses and self-insured companies they may theoretically avoid the mandate by offering what is basically just insurance in name only. From the Wall Street Journal:
But a close reading of the rules makes it clear that those mandates affect only plans sponsored by insurers that are sold to small businesses and individuals, federal officials confirm. That affects only about 30 million of the more than 160 million people with private insurance, including 19 million people covered by employers, according to a Citigroup Inc. report. Larger employers, generally with more than 50 workers, need cover only preventive services, without a lifetime or annual dollar-value limit, in order to avoid the across-the-workforce penalty. […]
Administration officials confirmed in interviews that the skinny plans, in concept, would be sufficient to avoid the across-the-workforce penalty. Several expressed surprise that employers would consider the approach.
The Rube Goldberg nature of how people are supposed to get insurance under the Affordable Care Act creates a huge amount of bureaucratic waste and the potential for many to fall through the cracks. The maddening lack of consistent standards could end up causing much more damage.
Since the exchanges will be very small markets it is unlikely most large businesses will use this strategy. If even a modest number of companies use this to cheaply shift their least health insured employees onto the exchanges, these companies could push up premiums to discourage use.
More importantly, President Obama’s most used justification for the law was to stop people from going “bankrupt if they get sick.” Most Americans who experience medical bankruptcy are actually underinsured not uninsured. By allowing large companies to underinsure employees the ACA will not stop medical bankruptcy.