Target has become the latest large retailer to eliminate health care
benefits for its part-time workers. The Minnesota-based retail chain’s
decision follows similar moves at Home Depot, Trader Joe’s and Forever
21. The move takes effect April 1.
In a statement on its web site, Target directly cites the launch of
the Affordable Care Act (ACA) as the main driver of its decision. Its
move is one more indication that the implementation of the health care
overhaul commonly known as Obamacare is undermining the
employer-sponsored health care system in the US—the means by which the
majority of the population receives health benefits.
Target cynically claims that the company is doing its part-time
employees a favor by dropping their insurance, stating, “The launch of
Health Insurance Marketplaces [ACA] provides new options for health care
coverage that we believe our part-time team members may prefer.”
The retail giant claims that “by offering them insurance we could
actually disqualify many of them from being eligible for newly available
[ACA] subsidies that could reduce their overall health insurance
expense.” The statement also notes that “less than 10 percent of our
total team member population participates in our part-time plan,”
arguing that the impact on the workforce will be minimal.
Target’s statements are disingenuous at best. While the company does
not publicly reveal the cost structure of its present health plan for
part-timers, the fact that only 10 percent of the Target workforce is
presently enrolled in the plan suggests that it is unaffordable for
workers, the majority of whom earn $15 an hour or less.
Rather than improving the affordability of its health care coverage
for part-timers, Target is seizing on the launch of Obamacare to dump
these workers onto the health care exchanges. They are making this move
in advance of an ACA rule set to go into effect in 2015 that will
require companies with 50 or more employees to offer health insurance to
all full-time workers, defined as those working 30 hours or more, but
will exempt them from covering part-timers.
While employers will be under no obligation to cover part-time
workers, under the ACA’s “individual mandate,” any worker—full- or
part-time—who is not insured through his or her workplace or a
government program such as Medicare or Medicaid must obtain insurance or
pay a penalty. Companies such as Target that are dumping insurance for
their workers are adding to the pool of individuals who are now required
by law to purchase insurance from private insurers on the exchanges.
Target is offering an insulting one-time $500 cash payment to those
part-time workers presently enrolled in their health plan to “enable a
smooth transition for those team members most impacted.” Workers
shopping for coverage will discover that this amount will do little to
offset the price of premiums and out-of-pocket costs for the least
expensive “bronze” plans offered on the Obamacare exchanges.
As an example, the “window shopping” feature at the HealthCare.gov
web site shows that one of the bronze plans available to a couple in
their late fifties living in Dallas, Texas is priced at $680 a month and
includes annual deductibles of $12,700 for the couple and $6,000 per
individual. Another comes with a $1,019 monthly premium, $10,200 family
deductible and a $5,100 individual deductible.
The government subsidies for low-income workers to purchase such policies are minimal. Sarah Kliff’s
Washington Post blog
estimates that a “hypothetical 25-year-old Target sales floor leader,
for example, who earns $15 an hour and works 29 hours per week would
qualify for a monthly health care subsidy of $96 if Target does not
offer insurance.”
Additionally, people purchasing Obamacare plans are on the hook for a
wide range of out-of-pocket expenses. Aside from annual wellness
visits, some screenings and other “essential services,” individuals and
families will be required to pay their deductibles
in full before
services can even be accessed. This will inevitably lead to people
forgoing care because they simply cannot afford it, despite the fact
that they are “insured.”
Another high out-of-pocket cost on the Obamacare exchanges is the
outlay for certain prescription drugs. Drugs must be included in a
plan’s drug formulary in order to be covered. On the bronze plans, even
if a drug is covered, the insured may be responsible for cost-sharing of
as much as 40 percent of the price.
Networks of hospitals, doctors and other providers are also severely
restricted on many plans. In a number of states, the Obamacare plans
include only one or two hospitals and exclude some of the most
prestigious research and teaching institutions.
It is inevitable that other big, low-wage employers will follow
Target’s lead and drop coverage for their part-time workers, if they
have not done so already. In 2011, long before the launch of Obamacare,
retail giant Walmart announced that it would stop health coverage for
employees hired after February 1, 2012 who work less than 24 hours a
week.
Other companies are dropping coverage for spouses of employees. Last
August, United Parcel Service said it was dropping coverage for about
15,000 employees’ spouses who are eligible for coverage through their
own employers.
Employers have been shifting health care costs onto their workforces
since at least the late 1980s. The Affordable Care Act is providing the
impetus for making even more dramatic changes.
Companies are shifting more and more costs onto employees through
increased cost-sharing in the form of higher deductibles and co-pays.
Others are eliminating traditional plans and shifting their workers to
private exchanges similar to Obamacare, where workers must fend for
themselves in the selection of plans for sale by private insurers.
A substantial number of large businesses are expected to drop their
coverage altogether, choosing to pay the minimal penalties imposed by
ACA for not providing coverage. Of the 156 million people—more than half
of the US population—who were covered through their employer in 2013,
the Congressional Budget Office estimates that by 2016 some 6 million
fewer people will receive employer-based health insurance.
These moves bring into focus the real aim of the health care
overhaul, which has nothing to do with expanding access to high-quality,
affordable insurance. Obamacare was devised from the outset as a means
of dismantling the employer-based system of health insurance that for
decades guaranteed a basic level of health care for tens of millions of
Americans.
Touted as a plan that would promote “affordable,” “near universal”
health coverage, in reality the legislation is tailored to the profit
interests of employers and the health care industry, while reducing and
rationing care for the vast majority of workers and their families.
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By Michael Snyder, on January 23rd, 2014
