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Unintended Consequences

After being told that the Affordable Care Act would increase access to health care, Americans are waking up this week to find that’s not necessarily the case. As companies try to comply with the healthcare mandate and still preserve their margins and the jobs of their workers, those with high numbers of low-skill workers are turning to what the Wall Street Journal calls “bare-bones health plans.” Employers fitting this profile can get by with offering preventive care and little else and still avoid the law’s penalties.

These plans defy the predictions that the ACA would result in more coverage for more people. Instead, these so-called “skinny plans” provide minimal coverage. If you’re covered by one of these plans and you need an X-ray, prenatal care or surgery, you may be out of luck.

The law requires that employers with 50 or more workers have to provide health insurance or pay a $2,000 penalty per employer. Up till now this has generally been interpreted as meaning a full range of benefits. But apparently this requirement applies to those plans sold to small businesses and individuals. These are the two groups that typically have had the most difficulty obtaining reasonably priced insurance.

The feds say that these skinny plans appear to answer the mail with respect to larger companies that employ lots of low-wage workers. With typical American ingenuity a cottage industry may be developing around the need for these stripped down plans, which allow employers to comply with the law but not at a cost that would cost jobs. When the ACA bill was passed by Congress, accompanied by emotional speeches from its supporters, I don’t think this is what they had in mind.

The ACA is another example of what can go wrong when you try to carve things like technology or social policy into federal legislation. You may not end up with what you thought you were going to have. More importantly, while the law ossifies on the books, technology, policy and business practices change, creating a law that can obsolesce before anyone realizes it (Hello, Alternative Minimum Tax).

Look for the bill’s supporters to bob for another bite at the apple and close what they see as a loophole in the law’s application. But with the House controlled by Republicans this time around, don’t look for ACA II anytime soon. Lawmakers who try to out think and out pace a free market are most often on a fool’s errand.