In a quest to save money, political leaders in Washington state are exploring a proposal that would shift some government workers out of their current health plans and into the insurance exchange developed under President Barack Obama’s health care law.
Lawmakers believe the change, which could affect thousands of part-time state employees and education workers, would save the state $120 million over the next two years. It would push more health care costs onto the federal government because many of the low-income workers would likely qualify for federal subsidies.
Washington state appears to be the first major government to seriously explore the possibility of pushing public employees into the exchange, but it probably won’t be the last. Rick Johnson, who advises state and local governments on health care policy at the New York-based consulting firm Segal Company, said he expects it will be an option some state and local governments will explore in the years to come.
“I can see that as one of the solutions out there,” Johnson said.
A spokeswoman with the Department of Health and Human Services declined comment.
Because the federal law requires employers to provide coverage for those working at least 30 hours a week, states are exploring ways to manage their part-time employees.
Virginia, for example, is requiring all part-time employees to work fewer than 30 hours, which will help the state avoid penalties for not providing health coverage. Florida is facing a potential $300 million penalty for not covering workers who are on duty 30 to 39 hours a week, so it’s moving to extend coverage to those employees.
Washington state is in a less common situation because it already provides coverage for part-timers down to 20 hours a week.
The Washington proposal has been advanced as a way to help deal with a $1.2 billion budget shortfall. Under it, Washington state would make policy changes and secure agreements in which staffers who work between 20 and 30 hours a week would get extra compensation but lose their health coverage. They would then be eligible to get health care in the federal plan, without any consequence for the state.
While Democratic lawmakers have expressed concern about the Washington state plan this year, it is drawing growing interest with a bipartisan group of political leaders in the state.
Democratic Gov. Jay Inslee, who supported the health care law while in Congress, has reservations about the plan but also said federal rules don’t dictate how employers and employees should handle insurance coverage. Inslee indicated that he may consider supporting the idea in the future.
“It’s one of those ideas that’s premature for us to launch this year, but I don’t think we should take it off the table,” Inslee said Tuesday.
Supporters of the plan say the proposal could help some part-time workers financially and could put them in a position to have better health care benefits. Lawmakers also see it as a boon for the state budget.
“I think it’s a great way to fully take advantage of the Affordable Care Act,” said Republican Sen. Andy Hill, one of the state’s top budget writers.
K-12 workers would have to adopt new bargaining agreements to implement the change, although the state would help by offering sweeteners equivalent to as much as a $2 per hour raise.
Rick Chisa, political director at the Public School Employees of Washington, said the union is open to shifting some workers to the exchange. But Chisa didn’t feel that the current proposal — an inducement valued at perhaps $200 a month for someone working 25 hours a week — provided an adequate incentive, especially if it may be taxed as compensation.
He said the change might eventually make sense for cafeteria workers and teacher assistants who are on the low end of the pay spectrum. But union leaders also want to see what the insurance product will end up looking like in the exchange before making that move.
“We want to make sure that we’re not selling workers short and being mesmerized by a shiny $2 bill,” Chisa said. He said it was “very unlikely” for such a shift to happen this year.
Under the federal law, large employers who fail to provide coverage to full-time workers will face penalties, but not for employees who work less than 30 hours a week. Thousands of part-time government employees in Washington state work between 20 and 30 hours a week and currently qualify for state medical coverage.
The shift could be a problem particularly for part-time workers who have larger family incomes.
Steve Hodes, who works 24 hours a week doing policy work for the Washington state Employment Security Department, said he would not qualify for insurance subsidies because his wife makes a decent salary working as an attorney.
He suspects he and his family might be on the hook for thousands of dollars in new expenses if he was moved to the exchange, although solid numbers are elusive because the exchange has not started operating.