One of the goals of health care reform is to expand the number of insured and make coverage more affordable. There are two key aspects to making this happen. First, expanded Medicaid coverage and second, health insurance exchanges that are subsidized by taxpayers. The kicker is, only those with coverage that is considered “unaffordable” will qualify to participate in the subsidized exchanges.
Here’s the “oops”. The people caught between a rock and a hard place are those who have lower incomes but whose incomes are not low enough to qualify for Medicaid. One of the goals, and rightly so, of health care reform is to keep people from dropping affordable employer based coverage and turning to the taxpayer subsidized exchanges.
In order for an individual to qualify to participate in the health insurance exchanges the employer sponsored plan must exceed more than 9.5% of the workers household income. The problem, and the “oops”, is that the calculation is based on individual coverage, not family coverage and family coverage is much more expensive in most employer sponsored health care plans.
The Kaiser Family Foundation estimates that 3.9 million dependents are in families in which the worker can afford individual coverage (costing less than 9.5% of total income) but not the family plan, which cost, on average, 14% of total income.
There’s no easy fix for the glitch. If the dependents are allowed to utilize the exchanges then the health care reform law, as currently written, would penalize employers who cover the family member participating in the employer sponsored plan but not able to afford family coverage through the same plan. The law imposes penalties on employers if their workers have to resort to seeking subsidies because their job based coverage is too expensive. Even if employers are not penalized, adding 3.9 million unplanned dependents to the taxpayer subsidized exchanges would significantly increase the cost to taxpayers.
Congress could vote to amend the law to get rid of the loop-hole but the chances of that are slim because many in congress are not supportive of the health care reform law in general and any type of vote may drastically change the law and I doubt the President wants to see that happen. If nothing is done many vulnerable families could be left without any coverage which doesn’t get at the goal of health care reform.
I don’t know what will happen but a really big “oops” has come to the surface.