CHARLESTON, W.Va. -- Cutting benefits to part time workers may save CAMC money but it's unlikely to change the amount the hospital pays in "Cadillac" tax, those familiar with that provision of the Affordable Care Act, said.
Earlier this week, Charleston Area Medical Center announced it would cut back health benefits for its part-time workers.
Starting in 2014, those who work 20-23 hours a week will no longer be eligible for health coverage. In 2015, employees must work at least 30 hours to be eligible for health care. Workers who are able to do so were encouraged to work more hours to regain the health benefits.
CAMC said the cuts were due to a part of the Affordable Care Act requiring companies to pay a 40 percent excise tax on the amount that employee health plans exceed $10,200 for an individual or $27,500 for a family. The so-called "Cadillac tax" on the most generous health plans goes into effect beginning in 2018.
CAMC spokesman Dale Witte said the amount the hospital pays towards an employee's health care would be above that amount. The hospital will make incremental changes over the next four years before the tax takes effect.
"There are other requirements for health-care reform that will take effect between now and then that also have cost implications," Witte wrote in an email to the Gazette.
Perry Bryant, the executive director of West Virginians for Affordable Health Care, said he was perplexed by CAMC's reasoning.
"I don't know how dropping part time workers helps them at all, I just don't understand that," Bryant said. "How that could help you reduce the average cost of the health care plan?"
Bryant he was surprised that CAMC's plans were so expensive they would be affected by the Cadillac tax at all.
"I'm stunned that CAMC offered plans that were that rich," Bryant said. "I would like to see the hospital's benefit structure. That's double the cost of a typical Blue Cross Blue Shield plan."
Witte said the hospital would not publicly announce further details about employee insurance plans.
Dr. Dan Foster, a CAMC physician and former state legislator, was also surprised that CAMC's plans would be affected.
"I'm surprised the policies we had were that rich," Foster said. "I realize it's a self-insured plan and the calculations may be different."
Brandon Merritt, a health policy analyst for West Virginia Center on Budget and Policy, called the hospital's move "a business decision" that's altogether separate from the issue of the Cadillac tax.
"I'd be interested to know what CAMC plans to do with the savings from this move and whether or not they intend to pass along at least a portion of those savings to the part-time workers to help them pay for insurance on their own," Merritt said. "Hopefully they don't plan to pocket it all themselves."
CAMC isn't the only company to drop health care benefits to part time workers in reaction to the Affordable Care Act.
Retailer Trader Joe's, dropped health benefits to part time workers and contributed some of the money it saved to a stipend that employee's can use to buy a health care on the health insurance marketplace.
Employees might actually get a better deal on health coverage on the health insurance marketplace. That depends on the employee's financial situation.
"I really think that for most part time [CAMC] employees affected by this that they'll be able to find a more affordable plan in the marketplace after tax subsidies," Merritt said. "It's really hard to generalize though since everyone is in a unique financial situation."
While CAMC may be the first hospital in the state to cut benefits for part-time workers, at least one other hasn't ruled it out.
Cabell Huntington Hospital offers part time workers health insurance benefits. Spokesman Charles Shumaker said the future of those benefits is under discussion.
The Affordable Care Act doesn't require companies to offer health coverage to workers who have fewer than 30 hours.
"Therefore, we do have ongoing discussions about the future health benefits provided by the hospital for our part-time workers after January 1, 2014 when the ACA takes full effect," Shumaker said. "Those discussions are taking place in conjunction with our ongoing collective bargaining talks with SEIU 1199, the union representing more than 700 employees including licensed practical nurses, lab workers, service and maintenance personnel at Cabell Huntington Hospital."
Cabell Huntington has around 2,300 employees and, with their families, more than 5,200 people are insured under the company's health plan, Shumaker said.
WVU Health Care, which has 4,653 covered employees and 9,966 with dependents, has no plans to cut health benefits to part time workers, spokeswoman Amy Johns said.
Thomas Health System, which owns Saint Francis Hospital and Thomas Memorial Hospital, offers part time workers benefits and does not plan to stop, spokeswoman Paige Johnson said last week.
Tony Gregory, vice president of legislative affairs for the West Virginia Hospital Association, said CAMC's decision underscores that the Affordable Care Act will mean not only changes in health care but also in the way large employers operate.
CAMC is the third largest employer in the state, according to Workforce West Virginia data.
"I think it's important also to point out that the health care industry as a whole is under financial, operational political and regulatory pressure," Gregory said. "For example, many ACA provisions require hospitals to change the way they deliver care to make it more efficient and to reduce over utilization and unnecessary care."
Hospitals in West Virginia will face more than $1.3 billion in cuts due to reductions in Medicaid and Medicare payments over the next 10 years, Gregory said.
"This is another example of the type of pressure that hospitals are facing across the board as a result of a new phase of care through the ACA."
Reach Lori Kersey at firstname.lastname@example.org