Sign ups for the Affordable Care Act start in a week, and the program is leading to changes in the way employers handle health coverage.
Steve Julian: Business analyst Mark Lacter, what's the most noticeable adjustment?
Mark Lacter: Steve, once you get beyond the squabbling over efforts to defund the new law, what's happening is quite remarkable: businesses are finding new ways to administer and pay for coverage - and some would say it's long overdue. One interesting example: the grocery chain Trader Joe's, which is based in Monrovia, employs over 20,000 people, and shells out millions of dollars a year in helping provide its people with health insurance. Well, Trader Joe's has decided to end coverage for part-timers working fewer than 30 hours a week - under the new law businesses are not obligated to provide benefits to employees who work less than that amount. However, the company is giving those people $500 to go towards the purchase of premiums at the new public exchanges. And that, along with the tax credits available, could make the new arrangement cost about the same or even cheaper than the current health care package.
Julian: How did TJ's explain this to its employees?
Lacter: The company cited the example of an employee with one child who makes $18 an hour and works 25 hours a week. Under the old system, she pays $166 a month for coverage; under the new system, she can get a nearly identical plan for $70 a month. Now, there are cases in which workers will end up paying more - usually it involves having a family member who makes more money, but who doesn't have access to coverage (good example would be an independent contractor or freelancer). By the way, other companies - including the drug store chain Walgreen's - are also moving part-timers to the public market, and offering some sort of a subsidy.
Julian: I imagine not all companies are being as conscientious...
Lacter: No. We've seen a number of corporations cut worker hours and not offer a supplemental payment. Steve, it's worth remembering that administering health insurance is something that businesses fell into quite by accident 60 years or so ago - premiums cost next to nothing at the time, and it was seen as way of attracting workers without having to jack up wages. The arrangement became more attractive over the years because of certain tax benefits. But, it's far from ideal - workers move from job to job more often than they used to, and not all businesses are capable of handling the extra costs, especially small businesses.
Julian: Doesn't L.A. have a higher percentage of uninsured than elsewhere?
Lacter: Considerably higher - the Census Bureau show that 21 percent did not have coverage in 2012, which is higher than the overall national number. Now, there are a bunch of reasons for this: L.A. has a large percentage of households that simply can't afford health insurance or don't have access to government programs, among them undocumented immigrants. You also have big numbers of people who are self-employed and don't get covered - we're talking about freelancers or consultants of some sort.
Julian: …Or, they work for small businesses whose owners either can't afford, or don't want to provide coverage…
Lacter: That's right - the new law only requires businesses with more than 50 full-time workers to offer health insurance, and a lot of small businesses don't meet that threshold. The Census Bureau says that in the L.A. area, one in four people with jobs do not have health insurance - and, by the way, there's been a drop-off both in the percentage of businesses in California that offer coverage.
Julian: Sounds dire. Who picks up the cost?
Lacter: Well, we all do in one way or another - and that, of course, is the problem. What the Affordable Care Act offers is a start in getting some of the uninsured onto the rolls. Clearly, it's an imperfect solution that will require all sorts of adjustments, and even though everyone and their uncle seems to have formed a definitive opinion about the new law, it's going to be years before there's any real sense of how it's going. And, let's remember, signing up for these programs is not some political act. It's just a way for people to get health insurance for themselves and their families.
Mark Lacter writes for Los Angeles Magazine and pens the business blog at LA Observed.com.