Barack Obama wanted to change American health care as we knowit. And he is, in ways that go far beyond the goals of theAffordable Care Act.

For weeks, headlines have cataloged the upheaval at privateemployers: UPS dropping coverage for employed spouses, IBMreworking retiree benefits. Yesterday came the biggest change:Walgreen Co., the largest U.S. drugstore chain, told 160,000workers they must buy insurance through a private exchange ratherthan having the company arrange their coverage.

None of the moves was dictated by the health-care law. All,though, have occurred in an environment shaped by Obamacare, whichhas pushed businesses and governments to reexamine theirhealth-care role as costs soar and national priorities shift. Theact now is giving businesses cover to loosen the decades-old linkbetween jobs and health insurance, a shift that may further cloudthe outlook for an already unpopular law.

“It's going to be easy for conservatives who can't beat up onthis enough to point more fingers,” said Robert Laszewski, aninsurance-industry consultant based in Arlington, Virginia. “If youpass the largest health-care reform bill in 50 years, theneverything that happens in terms of people's health insurance isyour responsibility, fair or not.”

The decisions were an unintended consequence of the law that mayultimately drive up taxpayer costs, he said. Stanford Universityresearchers voiced similar concern in a study last week. Risinghealth-care premiums could spur 2.5 million workers to switch fromemployer plans to coverage under the health law, they wrote in areport, boosting costs for the government by as much as $6.7billion.

With Congress engaged in a bitter feud over funding the 2010law, worries over benefits offer Republicans yet another line ofattack, said Stephen Hess, a presidential scholar at the BrookingsInstitution in Washington, in a telephone interview.

“It has to be bad news for Obama,” Hess said. “Working out asuccessful health-care system has to be his legacy.”

The Obama administration says it's confident the law will gainsupport as people, particularly the uninsured, see itsbenefits.

“One of the largest uninsured populations right now are the 55-to 65-year-old who may not have affordable coverage through theirjobs,” said Kathleen Sebelius, the U.S. health secretary, at a stoplast week in Newark, New Jersey. “The good news is that thosepeople will finally have an affordable option.”

Municipal Benefits

It's not only businesses reassessing costs. Detroit and Chicagohave proposed ending health plans for current or retired municipalworkers, since they'll be able to buy subsidized coverage throughthe health-care law. The Cleveland Clinic, one of the world'sforemost medical centers, announced yesterday it's consideringlayoffs, partly to prepare for cuts in Medicare payments containedin the law.

“What the ACA has done is put all 300 million-plus Americans inthe mode of thinking about health care,” said Jim Winkler, a chiefinnovation officer at Aon Plc. The London-based company runs theprivate exchange that will serve Walgreen's employees.

“You've got CEOs reading articles and going to conferences, andthat leads to a lot of discussions with Finance and HR about, 'Whatare you going to do to solve our health-care cost problem?'”Winkler said by telephone.

The shift by big employers, which now administer medical plansfor 160 million Americans, could cause headaches for a law designedmainly to help the uninsured and small businesses.

Polls show support for Obamacare slipping, even as theadministration prepares for the Oct. 1 debut of the onlineinsurance exchanges where Americans can buy subsidized coverageunder the act. Fifty-seven percent of Americans opposed thehealth-care law in a poll this month by CNN/ORC, a turnaround fromJanuary when the survey found 51 percent in support.

What the changes mean for workers is harder to predict.

IBM and Walgreen said employees will find more choice and,potentially, cheaper coverage by going through private exchanges,websites that will work similar to the new Obama markets, ratherthan taking a one-size-fits-all company plan.

That also puts the onus on workers to pick the right plan, anoften complex choice now handled largely by human-resourcesprofessionals. Much also depends on whether employers continue tosubsidize the plans and at what level, said Uwe Reinhardt, a healtheconomist at Princeton University in New Jersey.

“The companies realized they cannot continue to be a socialinsurance system for the American people,” he said by e- mail.Businesses, he said, have been “woken up by the ACA.”

Aon Jumps

Aon jumped 5.6 percent in New York trading yesterday, after theWalgreen announcement. Insurers fell. Investors are worried theirbusiness may suffer in the transition away from traditionalbenefits, Matthew Borsch, a Goldman Sachs Group Inc. analyst, saidin a note to clients.

The slide continued today. UnitedHealth Group Inc., the biggestU.S. health insurer, fell 1.8 percent to $71.70 at 11:46 a.m. NewYork time. Cigna Corp. dropped 2 percent.

Employers that announced changes in recent weeks said thehealth-care overhaul was one consideration among many. The law willraise costs for some businesses by imposing new taxes and requiringmore generous benefits for existing workers.

United Parcel Service Inc. said in August it would no longerprovide benefits to employed spouses of 15,000 non-union workers,since they must be offered coverage by their own companies underthe Affordable Care Act. Atlanta-based UPS also cited risingmedical costs in general for their decision, particularly expensesfor chronic conditions such as diabetes and heart disease.

International Business Machines Corp. and Time Warner Inc.followed with word they would send retirees to the privateexchanges, with company stipends to help pay for coverage.

IBM, based in Armonk, New York, said the move was made to helpkeep premiums low for the 110,000 Medicare-age workers affected bythe switch.

Last week, Trader Joe's Co., the closely held supermarket chain,said it would end health benefits next year for part-time workers.Employees will get a $500 payment next year and be sent to thepublic exchanges. With the federal tax credits available there,most workers will get a better deal than the company could offer,Trader Joe's said in a statement.

By offering other insurance options, “Obamacare has taken themoral imperative away for employers to continue offering coverage,”said Laszewski, the industry consultant. “The days of your father'shealth insurance are over.”

Companies have been grappling with insurance costs since wellbefore Obama signed the law, said Aon's Winkler. Businesses havebeen curtailing spousal coverage and retiree benefits for more thana decade, he said.

“I cringe when I see headlines that suggest that the AffordableCare Act is driving all this,” Winkler said. “It's certainly afactor that employers have to be looking at, but it is not thestrategy in and of itself.”

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.