Businesses dropping insurance for spouses, despite large profits

An increasing number of employers are cutting health insurance for spouses.  Thankfully, the numbers are still quite small, but the increasing numbers of spouses being dropped should be reason for concern.

Besides record corporate profits, the insurance companies have been doing quite well also — but this move suggests they want even higher profit margins, since spouses who are not working tend to use health insurance more.

Obamacare is a start, but health insurance in the US still needs to undergo a lot more reform to make it work for more Americans. Between the corporatist Democrats and the run of the mill Republicans, there’s little reason to expect additional reform, no matter how badly it’s needed.  The irony is that America’s health care system is already so much greedier, and less effective, than much of the developed world.  And businesses, and insurance companies, have the nerve to whine about Obamacare, which still leaves American workers far behind most of western Europe in terms of health coverage overall.

Of course, companies wouldn’t have to pay so much for health care had we only done real reform to our health care system.  But the Republicans, along with industry stooges like Lieberman and Baucus, said “no” – so America and Americans are destined to continue paying far more for less than what the rest of the developed world gets in terms of health care.

And the greedy companies doing this should be publicly excoriated.

doctor health care obamacare

Doctor via Shutterstock.

Market Watch:

By denying coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014. And health law guidelines proposed recently mandate coverage of employees’ dependent children (up to age 26), but husbands and wives are optional. “The question about whether it’s obligatory to cover the family of the employee is being thought through more than ever before,” says Helen Darling, president of the National Business Group on Health. See: When your boss doesn’t trust your doctor

While surcharges for spousal coverage are more common, last year, 6% of large employers excluded spouses, up from 5% in 2010, as did 4% of huge companies with at least 20,000 employees, twice as many as in 2010, according to human resources firm Mercer. These “spousal carve-outs,” or “working spouse provisions,” generally prohibit only people who could get coverage through their own job from enrolling in their spouse’s plan.

Such exclusions barely existed three years ago, but experts expect an increasing number of employers to adopt them: “That’s the next step,” Darling says. HMS, a company that audits plans for employers, estimates that nearly a third of companies might have such policies now. Holdouts say they feel under pressure to follow suit. “We’re the last domino,” says Duke Bennett, mayor of Terre Haute, Ind., which is instituting a spousal carve-out for the city’s health plan, effective July 2013, after nearly all major employers in the area dropped spouses.

While businesses and even government workers may be subjected to such cuts, something tells me that the political class will somehow be immune to such changes. Congress has done nothing to cut its own comfortable benefits during their push for austerity, it hardly sounds like a stretch to guess that this latest attempt at gutting the middle class will be avoided.


An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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