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The Catch: Oct. 21

By Allison Bell

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Analysts at the Urban Institute contend that most employers will keep their group coverage if they think workers will be better off in the employer-sponsored plans than shopping for coverage through the new exchange system.

If the Patient Protection and Affordable Care Act of 2010 (PPACA) takes effect as written and works as drafters expect, it will require large employers that fail to offer a minimum level of group coverage to pay a penalty for each employee who goes on to buy individual coverage using a new federal tax credit subsidy program.

Linda Blumberg and colleagues at the Washington-based institute argue against the idea that many large employers will choose to pay the penalties rather than offer coverage.

“An employer who drops coverage won’t save money overall,” the analysts write. “Employers who drop workers’ coverage, but fail to increase employees’ wages in order to maintain their overall compensation, will inevitably lose these employees to competitors. Thus, employers who drop coverage must in turn, increase wages.”

The pressure to keep group coverage will be especially strong when employers are thinking about what they need to do to keep valuable, better-paid workers, the analysts say.

Antidiscrimination rules and other rules and traditions likely will keep employers from finding ways to keep higher-paid workers in the group plans while letting the lower-paid workers go to the exchanges, the analysts say.

My own take: Er …. There are employers that actually want employees and don’t view keeping them as a nostalgia-tinged obligation? Uh, sure.

TANSTAAFL

There ain’t no such thing as free lunch, according to Wendy Ebner, president of the New Jersey Association of Health Underwriters.

When the government requires plans to cover procedures “for free,” “there is a perception that the cost of new mandates is somehow absorbed by the government or by the health insurance carriers,” Ebner writes in a commentary.

In reality, employers and their employees end up paying for the mandated benefits, either through higher premiums or through higher out-of-pocket costs for other services, Ebner says.

“When lawmakers considering a new mandated health benefit convene, they hear from organizations and lobbyists dedicated to finding financial support to fight a certain health concern,” Ebner says. “They hear from passionate doctors who treat the ailment. They hear from patients who have suffered. I know the testimony can be compelling. What politician wants to be attacked in campaign ads for ignoring the needs of the sick?

“The voice they aren’t hearing is the voice of the consumer. These are the people who need to decide between keeping their insurance coverage and paying their mortgage. They are the small business owners who would like to hire another employee but can’t afford the additional health insurance premiums.”

DIGITAL INSURANCE TALKS

Digital Insurance Inc., Atlanta, a company that seems to be buying many benefits brokers, will hold a free PPACA webinar aimed at employers at 2 p.m. Est Oct. 27.