Rational Goals Cannot Be Reached Via Irrational Laws

It is perfectly reasonable for a just and caring society to say that it wants to see health coverage for all of it’s citizens. 

Proponents of the Affordable Care Act (AKA Obamacare or the ACA) can be lauded for their desire to do just this.  But there are many things that are great to desire while being hard to accomplish.  Building a just and responsible society is one of these things.

Let me illustrate: 

Say you run a commercial lawn care business (or substitute a Christian ministry or a manufacturing plant or whatever type of company/group that you work for).  Now lets say that in your industry the prevailing wage for your work is $2500 per month, which is around $30,000 per year.  After all of the expenses of the business/ministry have been covered, including paying to the government any taxes that has to be paid, let say that there is $2,000 left.  Now the government comes in and says, “Oh, by the way, every company must now pay for health care for its employees.  And, this health care that it pays to its employees must be worth at least $4000 per year (the current average cost of a bronze plan per employee across the country – which is not even a very good plan and probably the worst way of spending that money to maximize the help that the employee will need for medical bills). 

What is the company to do?  They have been ordered to buy something for each employee that is going to cost $4000, but they only have $2000 available to cover the cost.  And if they spend this $2000 they have nothing left to help the company through hard times, nothing left to cover the unexpected loss of a client, nothing left to handle the cost of expansion if they land a major new order, etc.

 So the company says let’s share the cost with the employee.  But the employee has also used their entire budget at home, and they don’t have an extra $200 a month to put up their share of the cost.  This would mean cutting the cable bill out, and never buying fast food, and not stopping at 7-11 on the way back from picking the kids up from school to get a little snack.  So the employee doesn’t want to pay anything towards these costs either!

 So how do you find an extra $4000 a year.  Well the government might say, “OK business, if you don’t do this for your employees, we are going to fine you $3000 per employee (known in the ACA as the Minimum Value Penalty).  So now the company is really between a rock and a hard place.  What are their choices?

  • It could fire the employee so that it doesn’t have to loose money to keep them working!  Not good for either the company or the employee. 
  • It could offer the employee a health insurance plan where they know the employee cannot afford to pay for their portion.  This protects the company from the fines, but puts the employee in a terrible position of neither having insurance, nor are they eligible for any government help.
  • It could work with the employee to offer them the most that the company and the employee can possibly afford together, but the company must trust the employee in this situation NOT to opt out of the plan, and go to the government exchange where they might buy a similar plan at a subsidized price.  The reason for this is that the employee, by going to the exchange and buying the subsidized plan triggers the $3000 penalty on the employer, leaving the employer now not able to afford to hire this employee!

 Complicated, isn’t it!

If ever we need employers and employees understanding and working closely with each other it is in this topsy turvy world of the Affordable Care Act.  Every company in this situation needs to openly discuss these issues with their employees and together come up with the best way to protect the employees from the Individual Mandate fine, and help the employee get the best value for money from the available funds to provide health coverage, while not opening up the employer to the Minimum Value Penalty on the employer.

If you need help figuring this out for your company – visit us at The Health Co-Op (for churches or Christian non-profits)  or Sedera Health (for all other employers). We may be able to point you in the right direction.