Wednesday, September 4, 2013

Administration Considers Special Exemption for Unions

We've been following Obamacare's impact on unions.  It did not take very long for the administration to come up with a break for unions after the unions complained.  The government is exploring ways to make exchange subsidies available to union workers, especially those enrolled in multi-employer plans.

Before we get to that, the Michigan legislature approved the Medicaid expansion sending the bill on to Governor Snyder (who has promised to sign it).  One "reason" giving for approving the Medicaid expansion is that businesses won't have to pay the $2000 penalty/tax/shared responsibility payment for people who enroll Mediciad but would have to if they enrolled in the exchanges.

That's a red herring and it appears to me to be a misreading of how Obamacare works.

Both these stories raise an important point about the Obamacare scheme.  The basic idea behind Obamacare is that everyone needs to have health insurance.  Health insurance is key to access to the health system, the argument goes, and therefore everyone should have some form of coverage.

How do we get everyone covered?  First, most people get their coverage through an employer and that's assumed to continued.  Setting aside whether that is a good assumption, other people get coverage through government programs like Medicare or the Veteran's Administration.

What about the currently uninsured?  The Obamacare plan is essentially what some call a "three-legged stool."  (1) People with low incomes are expected to get coverage through expanded Medicaid programs, like the one Michigan is enacting.  (3) the Obamacare online exchanges will provide subsidized coverage for some people.  And lastly, (3) large employers (i.e. with 50 or more employees) will be forced to buy insurance for full-time employees, or else pay a penalty if employees get exchange policies.  If people don't get insurance, they will be fined, with some narrow exceptions.

Depending on income, some people will get subsidies if they buy a policy on the exchange.  You can calculate an estimate of the subsidy at the UC-Berkeley Labor Center.

Here's the catch.  A basic principle guiding Obamacare is that if a person can get coverage from an employer or the government, then that person is not eligible for a subsidy on the exchange.  In other words, if you get an affordable offer from your employer you should take it.  If you're eligible for veteran's coverage, you should take that.  That's true even if the offered insurance costs more than a subsidized Obamacare policy on the exchange.  It's also true if your eligible for Medicaid.

What the unions appear to want is an exception to this rule.  They want the subsidies for their private health plans, even though that violates the spirit and likely the letter of the law.  Private health insurance is already subsidized, as it receives tax-favored status.  Now the unions want to double-dip and get a second subsidy on top of that.  Moreover, it seems they could get a subsidy that non-union employees with private, employer-provided insurance won't get.

The Michigan $2000 penalty argument fails for a similar reason.  Some say that expanding Medicaid means businesses will lead to lower penalties on business.  Here's why that seems to be wrong.  If someone is eligible for Medicaid, that person is not eligible for subsidies on the exchange.  A Medicaid-eligible person could buy an exchange policy but under the law as written would not be eligible for a subsidy.  Even though the person has a low income, that person would have to pay the full price.

The penalty on large employers for failing to offer affordable insurance only applies if an employee buys exchange-based insurance AND gets a subsidy.  No subsidy-no penalty.  Perversely, this is true even in states without the Medicaid expansion.  So Michigan's expansion of Medicaid does not prevent penalties on business, it's just not a factor under the rules for determining when a penalty applies because a person eligible for Medicaid can't get a subsidy.

There's a lot of disinformation out there on both sides.  For the straight story, check out my book The Small Business Guide to Obamacare.  I may not like Obamacare, but I want you to get the straightest story possible.

Now for Today's Obamacare headlines.

Rightwing Rants

Obamacare threatens privacy.

Michigan Medicaid's expansion threatens long-term fiscal health.

Unions seek double subsidies for their health plans.

Growing number of Republicans calls for rejection of special break for Congress and staffs.

Obamacare may overturn ban on federal spending for abortions.

Leftwing Cheerleading

Obamacare will help small businesses cover employees.

Understanding the right's Obamacare obsession.

Straight News

Obamacare media blitz seeks to persuade young uninsureds to enroll.

Watch out for Obamacare scammers.

For Industry Insiders

Can Medicare Advantage survive PPACA?

Rand study paid for by HHS indicates employer policies will be cheaper but individual policies will cost more under PPACA.

Anti-fraud provisions save billions.

Employers must send exchange notice by October 1.

Unions seek right for members to get Obamacare subsidies.

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