In a long-awaited interpretation of the new health care law, the Obama administration said Monday that employers must offer health insurance to employees and their children, but will not be subject to any penalties if family coverage is unaffordable to workers.
The requirement for employers to provide health benefits to employees is a cornerstone of the new law, but the new rules proposed by the Internal Revenue Service said that employers’ obligation was to provide affordable insurance to cover their full-time employees. The rules offer no guarantee of affordable insurance for a worker’s children or spouse. To avoid a possible tax penalty, the government said, employers with 50 or more full-time employees must offer affordable coverage to those employees. But, it said, the meaning of “affordable” depends entirely on the cost of individual coverage for the employee, what the worker would pay for “self-only coverage.”
The new rules, to be published in the Federal Register, create a strong incentive for employers to put money into insurance for their employees rather than dependents. It is unclear whether the spouse and children of an employee will be able to obtain federal subsidies to help them buy coverage — separate from the employee — through insurance exchanges being established in every state. The administration explicitly reserved judgment on that question, which could affect millions of people in families with low and moderate incomes. (Read More)
It turns out that Nancy Pelosi was wrong; passing the health care bill wasn’t enough to know what was in it. We still don’t know how tens of millions of people will fare under this law, and how much it will cost federal and state governments. We have no idea what the consequences of the law will be for family budgets around the country. Given that at this point neither the White House nor the IRS (which is now responsible for key regulations that govern health care in our fascinatingly byzantine new system) knows how the law will apply to family insurance policies, we still don’t know some of the most basic facts about the brave new world of American health care.
It does, however, appear that the confident promises the health care law’s backers made about people who were happy with their current insurance being able to keep it were dead wrong. The law appears to create incentives for employers to jack up the price of the family plans they currently offer. It appears to create both a massive marriage penalty and a child penalty, and it increases the chances that one family will have to get its insurance from multiple plans with each insurance policy having its own different procedures and characteristics.
The strategic silence of the administration about whether the dependents of workers with affordable individual plans but without affordable family plans will be covered by the various subsidies and other measures the “Affordable Care Act” sets up points to a serious issue. If employers are going to be able to slough off the cost of family plans without penalty, federal and state governments are going to have a lot of expensive new subsidies to pay. But if employers are required to offer these plans at subsidized rates, American business would be crippled by huge imposed costs. And if ordinary families cannot get access to affordable insurance, the law could end up increasing rather than decreasing the number of Americans without health insurance.
Read the whole thing. This law stinks more every day.