Obamacare fallout: Part-time employees losing their health insurance

With Obamacare now about 10 months from taking effect, get used to more stories like this one from the Orlando Sentinel:

Universal Orlando plans to stop offering medical insurance to part-time employees beginning next year, a move the resort says has been forced by the federal government’s health-care overhaul.

The giant theme-park resort, which generates more than $1 billion in annual revenue, began informing employees this month that it will offer health-insurance to part-timers “only until December 31, 2013.”

The reason: Universal currently offers part-time workers a limited insurance plan that has low premiums but also caps the payout of benefits. For instance, Universal’s plan costs about $18 a week for employee-only coverage but covers only a maximum of $5,000 a year toward hospital stays. There are similar caps for other services.

Those types of insurance plans — sometimes referred to as “mini-med” plans — will no longer be permitted under the federal Affordable Care Act. Beginning in 2014, the law will prohibit insurance plans that impose annual monetary limits on essential medical care such, as hospitalization, or on overall spending.

The theory behind Obamacare comes down to this: Liberals believe it is better for you to pay a fine — er, tax — for not having the wonderful health insurance you can’t afford than to continue having the less-wonderful but affordable insurance you already have.

And if you don’t work at the Universal Studios theme park and still buy the line that “if you like your plan, you can keep it,” you might want to read what Colleen Medill, who teaches employee benefits law at the University of Nebraska, told Glenn Reynolds for his Instapundit blog:

I am deeply into studying the impact of Obamacare on employers, and I have been communicating with highly sophisticated ERISA lawyers who are advising employers, from Fortune 50 companies to small firms under 50 employees, on whether to keep or drop or modify their employer group health plans.

It has become very clear to everyone involved who is analytical and not ideological that the rational strategy, for both large and small firms, is to cease providing health care insurance to employees.

No company wants to admit that they are considering eliminating health insurance as an option, or be the first one to drop their health insurance plan, but once a competitor does so, the preference cascade will begin. The clear sentiment is “We will not be the first one to drop our health insurance plan, but we would be a close second.”

The coming preference cascade for employer group health plans is what the Democrats fear the most, because Obamacare was sold to the masses as “if you like your health insurance plan, you can keep it.”

The people who really know the law, and who have been following the avalanche of regulations, have already figured this out. It will take a while for this specialized knowledge to seep downward, because right now only $800+ an hour ERISA attorneys and the most sophisticated HR people understand how Obamacare really works.

Here’s a word to the wise: When a law benefits lawyers who charge $800-plus per hour and leads to fewer benefits for part-time employees, it is not going to be the boon to lower-income people that its advocates claimed it would be.

– By Kyle Wingfield

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