One result of the Obamacare employer mandate delay is increased pressure on the exchanges: if employers drop coverage of their employees, or even simply don’t offer coverage to currently uninsured employees, more people will have to migrate to the exchanges to fulfill the individual mandate. But the delay isn’t the only unexpected new influx into the Obamacare exchanges. Both Detroit and Chicago are hoping to save money and reduce pension obligations by moving retirees off city health care plans and onto the exchanges. Bloomberg:
[Detroit's Emergency Manager Kevyn] Orr wants to give current and former workers health-reimbursement accounts. The city would pay from $100 to $250 a month to help with medical costs or premiums under the Patient Protection and Affordable Care Act, according to a proposal to city unions [...]
Chicago plans to phase out retiree health coverage by the beginning of 2017, according to a May 15 letter from Comptroller Amer Ahmad.
It’s not clear yet what the outcome of this will be, or whether other states or cities will adopt this tactic. But one thing is true: Obamacare’s success depends in large part on enough healthy young Americans signing up for insurance to balance a risk pool that will now include the previously uninsured sick. If, in addition to them, tons of currently insured older Americans are going to lose their insurance and be kicked onto the exchanges, the number of younger people signing up for coverage has to be that much higher to counteract those new people entering the exchanges.
The ACA, to put it gently, is already on shaky ground. Just last week, for example, the LA Times reported that UnitedHealth, the nation’s largest insurer, is dropping out of California’s individual market. Similarly, Blue Cross Blue Shield will not participate in the exchanges in Iowa and South Dakota in 2014. And the WSJ puts the delay of the employer mandate in its discouraging context. Along with the Supreme Court ruling that invalidated the Medicaid expansion (28 states haven’t yet agreed to expand) and the refusal by many states (over 30) to set up their own health exchanges, the delay is the third major challenge to the central goal of the law: expanding access to insurance.
“You’ve got three body blows toward expansion of coverage,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions, a research unit of Deloitte LLP. “It’s three punches in a row.”
In light of implementation challenges like this, it will already been hard enough to sign up an adequate amount of young people to keep premiums low. If cities’ new way of saving money includes swamping Obamacare’s rolls with retired and formerly insured older Americans, the the law could be in big trouble.