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July 8, 2013
Editorial: Bump in the road for health reform but not a detour


(July 8 -- By the Editorial Board)

Most people in California and across the nation get health insurance coverage from their employer.

In the United States, 98 percent of firms with 200 or more workers provide health insurance coverage (97 percent in California). Similarly, 94 percent of firms with 50 to 199 workers provide coverage (92 percent in California).

Under the Affordable Care Act, businesses with more than 50 full-time workers that were not offering coverage - primarily restaurant and retail chains and agricultural businesses - were supposed to start offering coverage by January 2014 or face fines of $2,000 to $3,000 per worker. This was to help recoup the cost of publicly subsidized coverage for uninsured workers.

Two days before the July 4 holiday, however, the Obama administration announced that it would delay the large-business requirement by one year, until 2015.

For workers who are currently uninsured, this has no impact at all. They will still be able to get insurance coverage in the state exchange - with enrollment to begin Oct. 1 and coverage to begin Jan. 1 - or through expanded Medi-Cal.

For large employers, however, the one-year delay means no penalties for not insuring workers in 2014. On the upside, this means more time to work out the simplest way for large employers to report the coverage they offer to their workers.

On the downside, the one-year delay means that the public, not the large employer, picks up the cost for workers who get subsidized coverage in the exchange or in Medi-Cal. It also means that large employers that don't offer insurance continue to have an edge over those that do offer insurance.

The Affordable Care Act aims to level the playing field between businesses and prevent cost-shifting to taxpayers, while ensuring that workers of all incomes get coverage.

The real issue is whether the one-year delay will lead large employers to drop coverage. Few analysts expect them to drop coverage of workers in 2014, only to pick it up again in 2015. But those who currently don't offer coverage are likely to continue their policy of non-coverage.

At stake is a principle. Of 210,000 businesses in the United States with more than 50 employees, only 10,000 don't offer coverage. Should they be let off the hook?

On the other hand, many observers believe that, over the long run, we'd be better off with a system in which people could buy insurance on their own - with a menu of choices in the state exchange and continuing coverage as they change jobs - rather than obtaining insurance through an employer.

That conversation should begin in 2014, as we see how many people buy insurance in the exchange and whether they are happy with it. A one-year delay on the large-business requirement is a bump in the road, not a detour down a wrong path.

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November 2013

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