Debunking the United Parcel Service ‘Obama-Scare’ story


Posted by AzBlueMeanie:

The Arizona Republic today gave Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, an opportunity to smear the Affordable Care Act aka "ObamaCare" based upon the United Parcel Service "Obama-Scare" story making the rounds in the conservative media entertainment complex this week. Employers try to get ahead of health law. While the reporting does include relevant caveats and opposing viewpoints, the organization of the article is confusing to readers and arguably misleading.

If you want clarity on the United Parcel Service "Obama-Scare" story in the conservative media entertainment complex, you need to read Jonathan Cohn at The New Republic. Why UPS Spouses Shouldn't Be (Too) Mad at Obamacare:

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

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

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
. 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.”

spousal coverage is still the overwhelming norm: More than 90 percent
of large employers offer it, according to separate surveys by Mercer and
Towers Watson. But the percentage is declining and even those companies
who still offer spousal coverage are increasingly attaching financial
disincentives—like charging extra fees for spousal coverage or offering
rebates to employees whose spouses find insurance elsewhere
. Among the
companies that have taken such action are Xerox and Teva
Pharmaceuticals, according to the New York Times. Now UPS is joining their ranks. And the company is not alone. The University of Virginia this week announced that it, too, was reducing spousal benefits.

what role did Obamacare play in these latest decisions? It plainly
wasn’t irrelevant. In the memo to employees (which Jay Hancock of Kaiser
Health News obtained) and then in interviews with reporters, UPS
officials said that the company's actuaries expected overall employee
health costs to rise by about 12 percent next year—and that about a
third of that increase was in reaction to Obamacare. The officials
cited, in particular, the law’s requirement that employers offer
insurance to employee dependents under the age of 26.
The provision has
proven popular but, because of that, it’s also costing companies more
than they expected. UPS officials also pointed to the likely effects of
the individual mandate: Because workers face a financial penalty if they
remain uninsured, UPS officials indicated, they expected more employees
to enroll in the company health plans next year

those are basically one-time increases—the result of changes that will
take place only as Obamacare gets underway. And even by company
calculations, those increases account for a minority of next year’s
higher costs. The rest reflect the normal, year-to-year rise in health
care spending.
That increase has nothing to do with Obamacare, except in
the good sense: Many experts believe Obamacare has been helping to keep
those year-to-year increases lower than they might be otherwise.

what's the bottom line? The economists and industry representatives I
interviewed on Thursday mostly thought the new Obamacare requirements
were one factor large employers like UPS might be weighing—but only one
factor and, most likely, a modest one at that

“It’s not unimportant, but it’s not the majority of driver of costs,” said Helen Darling, president of the National Business Group on Health, whose members include 66 companies that are also in the Fortune 500. Paul Ginsburg,
an economist and president of the Center for Health Systems Change, had
a similar take. “The Affordable Care Act has had some marginal effects
on large employers, through coverage of young adults and through the
potential of higher take-up of insurance among employees,” Ginsburg
said. “But overall I’d say it’s a small effect.”

Gary Claxton,
a vice president at the Kaiser Family Foundation who specializes in the
private insurance market, is even more skeptical that Obamacare
regulations are putting serious pressure on employers. “To point to the
cost of the ACA is a real stretch,” he told me, “because those
provisions are trivial compared to the types of contributions that
employers make toward family coverage.”  An editorial from Bloomberg
raised one other possibility: "That UPS is using the health-care law as
a smokescreen for cutting costs it wanted to cut anyway.

[This information did not make it into the Arizona Republic's reporting.]

[E]ven UPS officials caution that Obamacare’s role in this decision isn’t
as big as some are making it out to be. “One way of saying this is that
we are restructuring our benefits ‘because of the ACA’—but that’s not
accurate,” Andy McGowan, a UPS spokesman, told me. “We are doing this
because we are looking at many different factors adding to our costs,
and ACA is one of them.”

None of this means that employees losing spousal coverage will like it.
They quite obviously aren't getting to keep their insurance, as Obama
famously promised. But it's hard to come up with a sound policy reason
why employers should subsidize insurance for spouses when other
coverage sources are available. And it's virtually impossible to think
up a system that would preserve spousal benefits indefinitely, at least
without creating other perverse incentives. By and large, Obamacare
really does leave most existing insurance arrangements in place. But the
law can't guarantee nobody's coverage ever changes. No reform could.

"It’s not like UPS is simply kicking spouses to the health care curb. The
new exclusion applies only to spouses who have jobs that offer
insurance. As a result, nobody is actually becoming uninsured because of this change."

So what was the purpose of the Arizona Republic publishing this "Obama-Scare" story, instead of publishing useful information about how people can get the facts about the Marketplace health insurance exchange and available benefits and coverage?

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AZ BlueMeanie
The Blue Meanie is an Arizona citizen who wishes, for professional reasons, to remain anonymous when blogging about politics. Armed with a deep knowledge of the law, politics and public policy, as well as pen filled with all the colors stolen from Pepperland, the Blue Meanie’s mission is to pursue and prosecute the hypocrites, liars, and fools of politics and the media – which, in practical terms, is nearly all of them. Don’t even try to unmask him or he’ll seal you in a music-proof bubble and rendition you to Pepperland for a good face-stomping. Read blog posts by the infamous and prolific AZ Blue Meanie here.


  1. How simple it would have been if Congress had just given us “Medicare for All”-a single payer system. Why should Americans have to be dependent on their employer for their health care? Why shouldn’t the health of ALL Americans be one of our government’s major concerns, along with education, jobs and safety?

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