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UPS drops health benefits for 15,000 spouses. An Obamacare bellwether?

UPS cited the effect of Obamacare on health-care costs in announcing the move, which deprives the 15,000 spouses of the option of keeping their current coverage, an Obama promise.

By Staff writer / August 24, 2013

A United Parcel Service logo. UPS has told nonunion employees that their spouses will no longer be eligible for company-sponsored health insurance if they can get coverage through their own jobs, blaming the decision on President Obama's health-care reform law.

Kacper Pempel/Reuters

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One of the basic pledges President Obama has made regarding his health-care reforms is that “if you like the plan you have, you can keep it.” It’s also a pledge that could come back to bite, politically.

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The latest sign of that is the news, made public this week, that shipping company UPS will no longer make health insurance benefits available to some 15,000 employee spouses. In announcing the change, the company referred to "Obamacare" as a reason it is having to battle to contain health-care costs.

This news comes alongside other signs that employers – the largest source of health insurance for Americans – aren’t finding it easy to continue with health coverage as usual.

Delta Airlines has voiced its own recent complaint about Obamacare’s effect on its health costs. And other news reports chronicle employers who are paring hours for some workers, saying the reason is to curb their health costs under the law.

In the case of UPS, the 15,000 spouses are husbands or wives whose employers also offer health benefits. This appears to be a case in which they like the plan they have (they’ve opted for the UPS plan rather than their employer plan) and can’t keep it.

Most UPS employees – those who are unionized or whose spouses don’t have another employer-sponsored health plan available – aren’t seeing a reduction in benefits.

And for the 15,000 who are affected, it’s a bit simplistic to say their options are narrowing solely because of Obamacare.

UPS didn’t say the law was the only factor behind its decision. And some health-care experts argue that businesses are using Obama’s Affordable Care Act (ACA) as a convenient excuse for continuing a long-term trend: straining to control the relentless rise in the cost of health benefits.

It’s certainly true that health costs were rising – and employers angling to tame them – long before a Democratic-controlled Congress in 2010 passed the ACA, with provisions designed to go into effect gradually over the course of a decade.

But some health-policy analysts say the law is imposing real costs on employers. After all, the act is designed primarily with the goal of expanding the share of Americans who have insurance, rather than with cost containment. Some provisions in the law promise to help control health-care spending, but other elements could push costs higher.

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