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

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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.

A July analysis by the consulting firm Mercer detailed the challenge, from the viewpoint of employers.

Last year they slowed benefit cost growth to its lowest level in 15 years, but in 2014 they have the new fees and the likelihood of new enrollment to contend with [due to the ACA] on top of normal medical inflation,” said Mercer chief executive officer Julio Portalatin.

The Mercer analysis focused on the recent decision by the Obama administration to delay a core provision in the law – a requirement that employers must pay a penalty if they don’t offer coverage to all employees working 30 or more hours per week.

Even with those penalties off the table for a year, the law will result in fees, changes in benefit-plan design, and increases in enrollment that will raise health-plan costs by 2 to 3 percent next year, according to the Mercer analysis. 

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