Many analysts downplay the Affordable Care Act's effect on companies such as UPS, noting that the move is part of a long-term trend of shrinking corporate medical benefits. But the shipping giant repeatedly cites the act to explain the decision, adding fuel to the debate over whether it erodes traditional employer coverage.UPS cites a few factors in Obamacare, like a research fee slated to rise to $2 per person and a temporary $63 per person fee, but:
Rising medical costs, "combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost," UPS said in a memo to employees.
"The notion that those are going to be make-or-break when they are otherwise absorbing 7 to 10% a year [in broader health-cost increases] is kind of ridiculous," said Jonathan Gruber, an MIT economist who advised the Obama administration on health policy. "Nobody expected the ACA to have a major effect on health costs for large firms."Not to mention that in addition to this move fitting in with the trend of companies slashing health benefits, it comes as the growth of health care premiums has actually slowed. But let's not let that get in the way of a good story.
The good news is that the people UPS is cutting at least theoretically have access to health coverage elsewhere. But if they were using UPS insurance, presumably they had a reason for it—the insurance at their job was more expensive, or not as good, or it was just more convenient for everyone in the family to have the same insurance.
UPS is certainly not out of the corporate mainstream in wanting to cut its workers' benefits. But blaming the move on Obamacare despite the fact that the similar health reform law in Massachusetts led to a rise in employer health coverage and that the CBO has said that large employers would see only a very minor impact on premiums—that puts UPS in a league with low-wage restaurant chains like Olive Garden and Papa John's. Is that really where it wants to be?