The big news in the healthcare world was that Target Corporation would stop offering health insurance to part time workers effective 4/1/14. Over the long run, this is good policy news.
Here is the Minnesota Star Tribune:
The Minneapolis-based retailer will give each worker $500 to help buy health insurance, and has arranged for one-on-one consultations with benefits manager Towers Watson to help with the transition….In the article, Kozlak acknowledged the disruption to workers. But she said the exchanges might offer options that some workers will prefer, and noted that those who qualify for subsidies and tax credits could find insurance that is less expensive than their current plan offered by Target….
Target, the nation’s second-largest discount retail chain, said less than 10 percent of its workforce of about 361,000 participates in the health plan for part-time workers….
The change goes into effect April 1, the company’s normal open-enrollment period. It will affect those who average 20 to 31 hours a week.
Health policy wonks across the political spectrum have at least a shared common stated goal of decoupling employment from health insurance over the long run. Companies don’t want to be health insurance purchasers and managers, people don’t want to be tied to a job because that is the only place they can get health insurance and the federal government does not want health insurance tied to employment for tax reasons. It is a massive economic and societal distortion that should be facilitated away.
Target’s plan to shift 35,000 people to the Exchanges is the first of many companies deciding that it does not want to be the health insurance point of contact when an adequate or better replacement is available. This was part of the plan of PPACA as the Exchanges in 2014 were overwhelmingly built for individuals and very small companies, by 2017, they are able to be open to any employer group.
And honestly speaking, most of the people who are no longer eligible to renew their plan at Target because Target is not offering it will be better off. Assuming an average wage of $10 an hour and a full work year, the income ranges from $10,500 to $16,750. In expansion states, that is the sweet spot of the Medicaid expansion so people will be getting very low co-pay insurance and a $500 bonus from Target. In non-Expansion states, this a little messier. If the person is single, the vast majority of people are subsidy eligible, and can get cost-sharing assistance Silver plans with a very significant subsidy. If the person is trying to insure a family, they might be stuck due to fucking Chief Justice Roberts et al as their income (if this is a sole source of income for the family) is too high for legacy Medicaid but too low for subsidies. I am hoping Target is thinking this through to make sure these people are no worse off.
Over the long run, we should expect to see more employers put their employees on the Exchange either directly by no longer offering coverage and paying the employer mandate fee OR by giving their employees a subsidy to buy insurance on the SHOP exchanges in the next couple of years. And from a policy perspective, this is a good to very good thing.