The latest Obamacare story getting everybody’s attention is about the United Parcel Service. On Wednesday, Kaiser Health News and USA Today reported that UPS was making a change in its employee health plan—and that, as a result, 15,000 spouses of UPS employees would lose access to company insurance. One reason for the change, according to the company, is that UPS faces higher insurance costs from Obamacare. Eliminating coverage for these spouses is one way the company can reduce its employee benefit costs.
The headlines certainly don’t look good. And, sure enough, Senate Minority Leader Mitch McConnell on Thursday cited the decision as more proof that Obamacare is a fiasco. But like so many Obamacare stories, this one is more complicated than it seems at first blush. Spousal coverage was becoming less common even before the Affordable Care Act became law. At most, Obamacare is hastening a trend that was already underway—quite possibly for some good reasons.
Employers have been trying to control or cut employee benefit costs for a long time, and it's no surprise they eventually started looking at spousal coverage. The idea is a relic from an era when dual-income couples were still relatively uncommon. In those years, employers had every reason to offer (mostly male) employees spousal insurance, since the (mostly female) spouses usually had no other source of coverage. But in the last ten to twenty years, as more women have entered the workforce and two-income families have become more common, companies have started asking why they should subsidize coverage for spouses who could just as easily get insurance from their own employers. “Two income families changed everything,” says Paul Fronstin, a senior research associate with the Employee Benefits Research Institute. “They changed the rules.”
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