Is the ACA the road to semi-single payer?

The Wall Street Journal has an interesting, and important, story on how some unions that supported the Affordable Care Act are now wary about how it will affect them once it is fully implemented. At issue is whether workers who get their health care through unions will be eligible for the same subsidies that are available for lower-income people who will get their insurance through the new health exchanges, or Covered California here.

As the law was envisioned, union workers would not be eligible for subsidies, just as others who get their coverage through work are ineligible. The idea is to use scarce dollars to help make insurance more affordable for those people who can’t get it anywhere else.

But the unions are worried because employers with fewer than 50 workers will not be required to provide insurance for their employees. Those workers will instead buy their insurance through the exchanges, and most will probably qualify for subsidies, which will vary depending on family income.

This — combined with the realization that, at least in the short term, premiums will be going up for most working-age people — threatens to create a situation in which the unions, by providing coverage for their workers, will price those workers out of the market. Small, non-union contractors who don’t have to provide insurance will be able to underbid the unionized companies.

The unions see this as a threat to their existence. But it also raises what I think will turn out to be the most important question about health reform: what will employers do?

Last year several restaurant owners made news, and invited public backlash, by admitted that they were cutting back their workers’ hours so that they would qualify as part-timers and thus not trigger the mandate for employers to provide coverage. Earlier this month Chicago mayor and former Obama chief of staff Rahm Emanuel said the city might stop providing retiree health care and instead send its former workers to the state-run and federally subsidized health exchange.

Now even the unions are talking about dropping insurance and sending their workers to the exchanges. If these musings become real and turn into a stampede, will the exchanges be able to handle the load? And will this lead, eventually, to the exchanges becoming de-facto single player plans, with most people getting their coverage through them?

I’m not sure whether that would be a good thing or a bad thing. Our employer-based system, after all, is responsible for many of the ills we now face in the world of health care. But it might have made more sense to design the system with this outcome in mind all along (as Bill Clinton’s much maligned reform plan would have largely done). On the other hand, any overhaul of the current system would have faced bumps and changes along the way. So maybe it is just as well that we sort of stumble and bumble our way to a new consensus about a health insurance system that might soon look radically different from the one we have today.

–Daniel Weintraub

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