Employers Discover the ACA’s Win-Win Strategy

Thom Lambert —  11 July 2013

The Wegman’s grocery store chain has long offered health insurance benefits to part-time employees working at least 20 hours per week.  The Affordable Care Act, however, has now driven the company to cut health insurance benefits for part-time workers.  Wegman’s management, it seems, has discovered that employees are better off if they can’t get insurance from their employer and are therefore allowed access to the generous subsidies available under the ACA.

As the Buffalo News explains:

[P]art-time employees may actually benefit from Wegmans’ decision, according to Brian Murphy, a partner at Lawley Benefits Group, an insurance brokerage firm in Buffalo.

“If you have an employee that qualifies for subsidized coverage, they might be better off going with that than a limited part-time benefit,” Murphy said.

That’s because subsidized coverage can have a lower out-of-pocket cost for the insured employee while also providing better benefits than an employer-paid plan.

Under the Affordable Care Act, part-time employees are not eligible for health insurance subsidies if their employer offers insurance.

“It’s a win-win. The employee gets subsidized coverage, and the employer gets to lower costs,” Murphy said.

Once employees get a taste for the ACA’s generous subsidies–which far exceed the implicit tax subsidy in employer-provided health insurance–they’ll be hooked on the statute.  Proponents of the ACA should therefore view this as a win-win-win!  The only losers, I suppose, are we taxpayers who must pay for all these subsidies.  At least we can take comfort in the fact that the statute reduces the deficit.

Thom Lambert

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I am a law professor at the University of Missouri Law School. I teach antitrust law, business organizations, and contracts. My scholarship focuses on regulatory theory, with a particular emphasis on antitrust.