Saturday, June 15, 2013

I think I know how temp agencies will survive Obamacare, and you won't like it

We have discussed repeatedly at this site whether the mandates imposed by Obamacare on firms that employ more than 50 full-time employees are going to fuck temp agencies and, by extension, temps, such as here and here and here. The thinking at the time was that temp agencies would have to either have to limit temps to 29 hours a week -- not a viable option, really -- or turn us into Form 1099 independent contractors -- a pain in the ass for temps and a legally dubious move on the part of temp agencies, given the IRS rules on 1099 contractors. Turns out there is a cheaper, viable solution that I think temp agencies will employ. Problem, of course, is it sucks for temps. But then, Obamacare sucks all around, so why should this be different. Let's face it, life in Temp Town sucks, so why should this be any different?

In any event, I believe my fears regarding the demise of the temp industry were misplaced. There is, within this clusterfuck of a law, a way for employers to offer their employees a cheap, qualifying plan that allows them to avoid the penalties they might otherwise incur for not offering their employees suitable health insurance. It is, of course, a plan that no one would actually want in a free-market kind of atmosphere, but let's not get carried away here. We now live in the world of government-mandated health insurance, so it should come as no surprise to learn that the temp employer's saviour is neither insurance nor likely to foster good health.

Behold, I give you the "skinny plan."  Trust me, this is not insurance you would buy in the real world:
ObamaCare's individual mandate is supposed to nudge healthy workers to buy comprehensive coverage, either out of a sense of propriety or thrift — not wanting to throw away money to pay a tax penalty.
But a new, low-priced health plan developed by insurers to cover run-of-the-mill medical costs — but not hospitalization or surgery — would let workers dodge the penalty and leave them with a clear conscience.
What most young, single people want in the way of health insurance is catastrophic coverage: low-cost, high-deductible insurance that leaves routine health care costs to the insured -- doctor visits, routine prescription costs that fall below the deductible amount -- while covering big costs, like hospitalization or major injuries that send the insured to the emergency room. For most people, this makes sense. It's like owning a car: you don't want your insurance to cover your oil changes and tire rotations, but you sure as hell want your insurance to pony up for accident damage.

Well, these skinny plans do the opposite. They're like buying auto insurance that covers inspection costs, oil changes and tire rotations, but is nowhere to be found when an accident happens. All the plans do is "help defray the cost of up to six visits to the doctor, x-rays, generic drugs and preventative care, the Wall Street Journal reported." This is, to use a term of art, fucking worthless as health insurance goes. But Obamacare has essentially outlawed buying the kind of catastrophic insurance that everybody except old people want, so this is probably what Temp Town is going to get.

In any event, these skinny plans are likely to cost only about $50 per month, so temp agencies probably will go with this. It makes sense for them, even if the coverage is worthless to temps. Seriously, if you don't get hurt or really sick, do you spend $600 a year on routine health care, like normal doctor visits and prescriptions? Most people don't. And this is just individual coverage, people. Your family is fucked. If you are healthy, it makes more sense to eat the penalty for not buying insurance -- it's only $95 or 1% of income in 2014, $325 or 2% of income in 2015, and $695 or 2.5% of wages in 2016 and thereafter. Of course, the IRS can only collect the penalty by withholding your tax refund, so, if you do your withholding so you have no refund, then you pay no penalty.

In the end, the skinny plans are not like insurance at all. They're like a pre-paid maintenance plan. Insurance is designed to cover extraordinary costs from unusual events, like when you get hit by a bus and have lots of hospital expenses. The skinny plans don't cover that, but they'll pay for lots of doctor visits. Let's face it, most people don't go to the doctor every other month. So who the fuck wants to pay for coverage that only covers that crap? Stupid.

On the up side, skinny coverage gives temp agencies a way to stay in business. So smile -- you get to keep clicking. Which, I guess, is kind of like telling galley slaves they can keep pulling that oar. Sorry, kids, that's the best I've got.

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