Here's a safe prediction: Between now and Jan. 1, 2014, there will be a barrage of stories about businesses struggling with the changes wrought by the 2010 Patient Protection and Affordable Care Act, better known as Obamacare.
There have already been quite a few pieces looking at the concerns of small companies that are approaching the 50-employee threshold set by the law. Starting in January, those with 50 or more full-time workers will face a penalty of at least $40,000 if any of their workers obtains subsidized coverage from a state insurance exchange rather than from an employer-provided plan. This provision gives companies an incentive to replace full-time workers with part-timers and contractors, or to stop growing before they need that many employees, neither of which would be good for the economy.
Then there are the challenges to the law's requirement that insurers cover contraception, as well as to the regulations the Obama administration issued to implement that requirement. This issue has been particularly troubling for employers affiliated with religious institutions or led by executives who oppose abortion; as the New York Times noted over the weekend, dozens of lawsuits have been filed against the requirement.
Congress could have avoided these fights by embracing an alternative approach to healthcare reform that had bipartisan support but was in some ways more radical than the Affordable Care Act: ending the country's reliance on employer-provided health insurance. The main proponents of this idea were Sen. Ron Wyden (D-Ore., shown above) and then-Sen. Robert F. Bennett (R-Utah), whose proposed Healthy Americans Act would have replaced the federal tax subsidy for employer-provided coverage with one for individually purchased insurance.
Their bill went nowhere despite the bipartisan backing, probably because it included too many provisions that made both sides cringe. Republicans balked at the bill's proposed mandate for all adult Americans to obtain insurance coverage and subsidies to help low-income families comply. Democrats didn't like the idea of shifting insurance costs from employers onto employees, even though many employers have already been aggressively doing so as insurance premiums skyrocketed.
There's no question that the transition Wyden-Bennett contemplated would have been rife with problems. For example, the bill would have tried to force employers to shift the money they'd been spending on health benefits into worker salaries, but there would have been no guarantee that individual employees would come out even. And it wasn't clear how individuals could pool their risks to spread costs, as employers do through their group plans.
But moving away from employer-sponsored plans would have averted a host of potential problems. I already noted the controversies over which employers are subject to penalties and what coverage they have to provide. There's also the contention that lower-wage employers will dump their insurance benefits entirely because the federal penalty is less costly than the benefits have become. That criticism ignores the fact that many employers provide health coverage, like other benefits, because it helps them attract and retain workers. But if entire industries dump their coverage en masse, companies that do so won't worry about being at a competitive disadvantage.
The irony here is that the strongest argument in favor of moving away from employer-based coverage is also one of the best rebuttals to employers' complaints about contraception coverage. As much as workers might cling to the perception that employers are "giving" them health benefits, the economic reality is that the employee absorbs the entire cost of the coverage. Some of it is explicit -- namely, the premiums they pay. But much of it is less obvious, taking the form of lower wages. The proof of this is in the data showing how wages have stagnated as healthcare costs have risen.
Given that employees are paying the full cost of the insurance directly or indirectly, why should employers have a say in what sorts of contraception the policies cover? When you look at the dispute that way, it's less about employers not wanting to pay for things that violate their religious beliefs and more about them not wanting to employ people who don't ascribe to those beliefs.
Regardless, lawmakers stuck with the employer-based system in the 2010 reforms. Hence the lawsuits over contraception, the complaints from small but growing businesses, and more complications to come.