Retread: Government Employees Pushed to the Health Insurance Exchanges

The AP is reporting that Washington state is considering a proposal to move part time state government employees eligible for employer sponsored health insurance out of state health coverage and into Exchange health insurance purchases.  This latest proposal focuses on Washington state government employees who work 20-30 hours per week only. Washington, unusually generous in this regard, has historically extended state health coverage to those who work for state government for as few as 20 hours a week.

Many other states are not so generous, but they also struggle with the budgetary significance of the ACA's requirement that those who work a minimum of 30 hours a week be offered employer sponsored health insurance. Virginia  is reportedly requiring that all part-time state employees work less than 30 hours a week, to dodge the ACA coverage requirement. This move parallels reports of similar conduct in the private sector.

Washington state's circumstances are distinguishable, of course.  These matters are a subject of collective bargaining in Washington state.  A revised collective bargaining agreement sweetening the deal for individual state workers in the 20-30 hours per week category to move to the Exchnage is reportedly under discussion.

But, as far as I can tell, noone is offering to sweeten the deal for Virginia's part time state employees.  Florida, taking another tack, is moving to extend state coverage to its 30-39 hours per week employees, a group that has traditionally not been offered health insurance in that state.

Where you end up, on this, depends on where you started, of course.  Each state has its own state employee insurance coverage and state government employment system. Each state starts with its own profile of coverage and non-coverage in the state employee population and must determine for itself how generous it chooses to be to less than full time state employees. I will note that, in some states, part time state employees are the majority of employees in some state agencies.  You may, for example, read about the predominance of part-time state employees in Virginia's ABCD here

Tradeoffs will have to be made.  Just as commercial employers must struggle with employer sponsored health insurance for part time employees, so must state and local governments. State and local governments, in fact, are the largest single employees in some places in the United States. State government employee wages have long been discussed as a fraction of total state employee compensation.  In tax parlance, compensation includes wages and benefits.  And anyone who has ever been involved in payroll knows that the tail can wag the dog in this regard.

Is it a good or a bad thing that state government employees below 40 hours or 30 hours a week employment status are moved to the Exchanges?  The answer to that will depend on what sweeteners, if any, these state employees bring to their Exchange purchases and to the prices of the plans in the Exchanges — particularly the prices of those plans that most closely mimic the scope and depth of the state health insurance offered to 30 hour a week or 40 hour a week state employees. The biggest sweetener for low wage workers — whether employed by the state government or in the private sector — is the potential expansion of Medicaid, of course.

It will come as no surprise to some that Arizona — several decades late to the party on original Medicaid — worked hard for approval of a plan to extend Arizona Medicaid to all Arizona state employees. This plan fell short of implementation.  But everyone should know that this idea is not new.


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