UPS Drops Employee Spouses From Health Plans

In an announcement earlier this week UPS, the largest global delivery service, announced their employees will no longer be able to insure spouses who can obtain health coverage through another company. Ultimately 15,000 people will be purged from their coverage universe beginning Jan 1, 2014. The decision is seen as a move to restrain ever increasing health care costs. UPS justified their decision in part by relying on the Affordable Care Act (“Obamacare”) saying, “Since the Affordable Care Act requires employers to provide affordable coverage, we believe your spouse should be covered by their own employer — just as UPS has a responsibility to offer coverage to you, our employee.” There is concern that UPS is the first of a wave of companies to reach this conclusion. 

I see the above as a perfect example why we should switch to a single-payer insurance program and forget this belief that getting insurance through your employer is somehow more efficient and preferable. While I do not doubt the sincerity of UPS’s position, I can’t see how this decision is going to result in better health care. A plan that is available to UPS employees may not be available to the spouses of their employees. Does it make sense for a mother to be insured by Aetna and the father to be insured by BlueCross? What is stopping UPS from saying the child of any employee who could be insured by their spouse’s employer is no longer eligible for coverage? Companies should not be directly responsible for paying for the health care of their employees. I have many thoughts:

First of all many, if not most, companies are not as large as UPS and therefore it is more difficult to purchase health coverage that is cost effective. Because of the size of UPS they are in a stronger bargaining position to demand cheaper rates and access to better hospitals. (One should note that by kicking 15,000 people off their rolls UPS is in effect weakening their purchasing power.) Relieving all companies from insuring their employees and instead dumping everybody into a single pool will maximize the power of the consumer to choose doctors or hospitals. Nearly every hospital accepts Medicare patients and therefore it is difficult to argue choice is somehow limited.

Second, in my opinion companies are not able to accurately value the benefit of providing good healthcare to their employees. By nature corporations are profit driven creatures. The focus is always going to be on increasing profits. One key way of doing that: cutting costs. This was one of the key motivating factors for UPS. They saw that they could save money by insuring less people. In the short run that will undoubtedly increase profits. But in the long run isn’t UPS concerned about alienating their employees? As suggested above, won’t forcing families to be on split plans potentially result in a less healthy, and presumably less productive, work force? Under a single-payer program UPS would not be constrained by needing to provide any coverage. They would be relieved of all insurance responsibilities. UPS would be free to focus exclusively on improving their package delivery services. 

Third somewhat related to #2, why should UPS be concerned about providing the best health care for their employees and their families? Sure there are some plausible reasons out there, but ultimately the company will always be able to replace a sick or dying (or dead) person with somebody new, somebody cheaper. A single-payer provider is not going to be constrained by that thinking. Instead the single-payer will be focused solely on providing the best care for everybody.

Fourth, one of the goals of Obamacare is to increase consumer choice and power. Yet we now have a company citing Obamacare as the reason they are going to limit their employees from being able to insure their families. Just seems perverse to me.

At the end of the day I don’t know how this decision by UPS will play out across the country and whether many, many other companies will follow suit. Maybe it will not be a transformative moment at all. All I do know is I read that article and thought this is a good example of why I don’t trust companies to be the gatekeepers responsible for providing access to health care. Do you feel the same way?