Obamacare Doesn't Make Employers Cover Spouses. Does That Matter?
Despite the 37 bills to repeal it and the scores of lawsuits filed against it, Obamacare, a.k.a. the Affordable Care Act, is going to be in full swing soon. But the historic health insurance reform law is going to face many more bumps in the road as it is rolled out. One corner of Obamacare that hasn't gotten much attention is the fact that it will not require employers to cover spouses, which experts say could lead some employers to drop coverage for Americans' significant others.
The Affordable Care Act mandates that employers offer health insurance to workers and their dependents. But the law defines dependents as children, not spouses. And although some health care law experts say this is not going to result in any big changes in the way that employers provide insurance for husbands and wives, others contend that implementation of the law could end up leaving some spouses out of family plans, forcing them to buy insurance elsewhere.
"Right now there are virtually no employers that just offer coverage for the employee and their children," says Tim Jost, a health care law scholar at the Washington and Lee University School of Law who regularly consults with Obama administration officials on implementation of the Affordable Care Act. "Whether that will change or not, who knows. We will probably see at least some employers who will offer individual and child coverage, but not coverage for spouses."
If you live in a household that is in the upper-income range—one that takes in more than $94,000 a year (above 78 percent of households)—and you get dropped from your spouse's coverage, you won't be able to get a government subsidy to purchase insurance on the government-run insurance exchanges being set up by the health law. So, say there's a family in which each parent makes $47,000 a year, but only one has coverage. The spouse that is not covered would have to buy private insurance, which costs hundreds of dollars a month.
If you're middle income or poor, and your spouse's employer drops you from her health coverage, you'll be able to shop on the exchange with a subsidy. Even though your coverage would not be free, the idea is that at least it would be kind of affordable. Unless it's not. When people buy coverage on the exchange, their subsidy will be based on household income. As Jost points out, the problem is that household income for people using the exchanges will be measured before the household pays for the employer-provided health insurance. So the employee could be paying up to 9.5 percent of her income on health insurance for herself (the most that Obamacare will allow insurers to charge for employer-sponsored plans), or an even greater share of her income for individual and child coverage, and still her spouse's subsidy on the exchange would be based on that much higher pre-health-care-costs income level.
"It's a potential problem," says Ethan Rome, executive director of Health Care for America Now, a group that backs Obamacare. "There could be some folks that get lost in the shuffle. And that is not insignificant…If you're one of few people adversely affected by something, it doesn't matter that everyone else on the planet is getting the benefit." (The Department of Health and Human Services declined to comment for the story.)
But Rome adds that the situation "has to be put in context." He points out that this potential glitch doesn't change the fact that some 30 million people currently without insurance will get coverage under Obamacare. And Jonathan Gruber, an MIT economist who helped craft Obama's health care law, notes that "we're still a hell of a lot better off than we are today."
Judy Solomon, vice president for health policy at the nonpartisan Center on Budget and Policy Priorities, adds that it's unlikely that too many employers will drop spouses anyway. "Family coverage is valued employee benefit," she says. "I don't see that this provision is going to change what employers do." Rome agrees: "If you are an employer and you provide good quality health care for your employees, including dependent coverage, it's because you understand that a good benefits package is the best way to recruit and retain top-notch employees."
Still, Rome says that Obamacare advocates would like to be able to address technical issues in the law, such as this potential spousal coverage problem, but that the Republican-controlled House makes that impossible. "It is an imperfection in the law and there are some things many of us want to fix," Rome says. "And we could if we did not have a GOP House of Representatives obsessed with repealing the law."