It is all too common for new laws to have unintended consequences. In many cases, those consequences are very much the opposite of what was intended.
In an effort to increase insurance coverage for low income working poor families, the Affordable Care Act requires employers with more than 50 full-time employees to offer medical coverage to most of their workers or pay a penalty. When industry protests failed to get this provision removed and it went into effect, one result was that some employers cut hours for many of their employees in order to stay in compliance with the law while not offering new coverage to existing employees.
In a nutshell, this means that many people who were supposed to get greater
access to benefits instead saw themselves downgraded from full-time to
part-time status and saw their income go down. However, even when employers try
to do the right thing, it is failing to move the numbers as much as the authors
of the new law had hoped. Some employers who complied with the requirement have found that a high
percentage of low income employees simply do not sign up.
While this has been a relief for some business owners, it still means that the
law is falling short of what it was intended to accomplish. Government data show some change, but also verifies that
it isn't in line with the anticipated results. Some industries with large numbers
of low wage hourly workers are finding that only one to two percent of eligible
workers sign up for the insurance being offered to them via their employer.
Although the Affordable Care Act has allowed millions of previously uninsured
Americans to gain coverage, most of those individuals benefited from expansions
to Medicaid, government subsidized insurance projects which are often easily
found and compared via online insurance quotes. Additionally, many people between 18-25 have gained coverage through their parents. The employer mandate was
designed to cover the working poor, who typically do not qualify for Medicaid
and similar programs. However, relatively few people have benefited from newly
available employer provided coverage.
The crux of the problem is that most employees making near minimum wage and
working 30 or more hours per week simply cannot afford their portion of the
cost of insurance. Even if the employer covers 65 percent of the cost, the
employee can still be paying up to 9.5% of their income for medical coverage
with high out-of-pocket costs. For many people in this income bracket, paying
for insurance would cut into a food budget that is already barely adequate.
One study found that households making less than $45,000 per year were hindered from getting the coverage they would like due to an inability to afford coverage.
With an income of $45,000 per year or more, 82 percent of households get coverage. Additional
income above that point has no statistically significant impact on rates of
coverage. The rate of insurance coverage below that income level was strongly
and inversely correlated to income.
Additionally, insurers do not really want to issue these policies because they
have good reason to believe that low income workers who are willing to pay for
coverage are probably in desperate need of coverage. This makes them a poor bet
for the insurance companies.
Although the law requires insurers to issue these policies, it does not require
them to renew them. This is a loophole that many insurance companies
are all too happy to exploit. The result is that a new policy must be sought
out every single year. At best, it is an exhausting treadmill. At worst, it is
another reason to not bother signing up.
The government initially predicted that only three to six million
taxpayers would pay the tax penalty for choosing to forego medical coverage.
Tellingly, the real number has turned out to be around 7.5 million people. This
is fairly strong evidence that things are not turning out as they had been
envisioned.
Before this law was enacted, many working poor did not have coverage. Following
its implementation, not much has changed.
