Video: Will ObamaCare drive businesses out of providing health insurance?

posted at 2:10 pm on March 24, 2010 by Ed Morrissey

In a word, yes, and that’s not just me talking. Last night, CBS did a perspective on how ObamaCare’s mandates and tax incentives will impact small businesses, which Democrats insist will see benefits from the ObamaCare largesse. The only problem is that the system actually incentivizes businesses to pay penalties and throw their employees into the government-run exchanges:


Watch CBS News Videos Online

• Businesses with fewer than 25 employees that pay an average of no more than $40,000 will get a tax credit – up to 35 percent of the company’s share of their total health care premium.

• Companies with 26-49 workers are unaffected.

• Businesses with 50 or more workers must offer coverage or pay $750 per worker. That penalty applies for every employee if even one signs up for government-subsidized insurance.

But there are potential problems. Case in point: It would be much cheaper for Dick Bus to drop the generous coverage he now offers and take the hit at $750 a head for his 120 workers. The penalty would be $90,000 a year. He’s currently spending $480,000.

Bus would save $390,000, but canceling his plan would force his workers to the health plan exchange and could cost more than they’re paying now. The Senate is considering an increase in the $750 penalty to prevent that scenario.

Bus insists that he won’t cut his employees loose, which is certainly noble, but unrealistic. If his competitors do it and lower their costs, allowing them to lower prices on their products and services, Bus will have to follow suit or go out of business. Small businesses already operate on tight margins, and this will be an easy business decision for those companies, at least when their CEO isn’t on camera.

In an otherwise good and balanced report, CBS misses another strange incentive. As listed above, small businesses only become eligible for the credits if their average salary remains below $40,000. That means a decision to give raises not only carries the cost of the raise itself to the business, but also a potential loss of that 35% subsidy ObamaCare grants. This will have the overall effect of suppressing salaries and putting experienced workers at a disadvantage in hiring decisions. It also provides an incentive to keep the workforce under 26 people; the 26th hire eliminates that 35% subsidy as well, making it a very expensive new position.

ObamaCare sets all of its incentives to oppose growth. Can anyone wonder at the impact this will have on the economy?

Update: One other anti-growth incentive, as Mark the Great points out in the comments: businesses with 50-60 workers have a big incentive now to downsize.


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One thing we can be sure of – those union “Cadillac plans” will be gone by 2018, when the huge tax on them is scheduled to kick in.

darwin-t on March 24, 2010 at 4:05 PM

–But you don’t have guaranteed issue (i.e. no pre-existing exclusion coverage) under the status quo. And the benefits are generally better than the status quo. So it’s not an apples-to-apples comparison.

Jimbo3 on March 24, 2010 at 4:00 PM

Really? How is the cheapest treatment the government can get away with better than the best treatment your doctor can think of? You’re right it’s nto apples-to-apples, it’s dog crap-to-apples

Russell28 on March 24, 2010 at 4:06 PM

But why wouldn’t your competitors drop health insurance now if they thought they could retain/hire good employees? Does the fact that there will be (in a few years) a more-ready option mean that all your competitors will suddenly decide to drop coverage?

First of all, let me say we’ll all be looking for your vigorous objection the next time some Democrat complains about any sort of “race to the bottom” scenario. In fact, I’m going to go back and look for any indication you might have given that you objected to sales of insurance across State lines on that basis. Think you could spare me the trouble?

Employers compete for employees, it’s true. But you have to reconsider the magnitudes here. Dick Bus can save $390k by dropping his employees to the exchanges. He might lose some of them to competitors, and this would add some search and training costs. But I suspect these pale in comparison to the savings. In my industry $400k is two senior executives’ salaries, burdened with with benefits, fully billable to overhead or G&A pools (meaning I could commit them to round-the-clock job searches and interviews for me).

DrSteve on March 24, 2010 at 4:07 PM

Yes I had pre-existing conditions. I got insurance, I just paid more than what I would have paid without it. My $240 would have been more like $150 sans pre-existing condition.

The left makes it sound like nobody that has ever got the flu can ever get insurance again. Plenty of people get insurance every day with pre-existing conditions. They just pay more for it.

It’s pretty amazing that you assume everyone has the same experience. My ex-girlfriend has a fairly minor pre-exiting condition and not only was she turned down by every private insurance co and HMO, but when one finally did give her coverage at $400 per month, prescription drugs were excluded (since she had to take medication daily).

In some states it’s worse, esp. when there are only 1 or 2 insurance companies. Simple economics dictates that to offer better premiums to the healthy, you have to deny coverage to those with conditions that are most likely to result in higher medical care costs.

Personally, I’m not impressed by people with the attitude of
“I’ve got my health insurance, anyone else can go screw themselves” attitude. I think a great company doesn’t turn it’s back on people because of their health condition.

bayam on March 24, 2010 at 4:10 PM

I’m selling cans of dehydrated water, $1 per can this week only.

Bishop on March 24, 2010 at 2:55 PM

Penn and Teller had people circulating in a crowd getting people to sign a petition to outlaw dihydrogen monoxide – something like that – water.

darwin-t on March 24, 2010 at 4:11 PM

The IRS objects to people using this as a tax dodge.
tom on March 24, 2010 at 3:21 PM

Guess what, it is still legal and in most cases if the person is smart enough…. you make more money in the long run.

They can’t complain about something they designed LOL!

upinak on March 24, 2010 at 3:43 PM

You certainly can do it. Just be prepared to prove according to the IRS guidelines that you’re not really an employee just pretending to be a contractor.

If you’re not sure you could prevail if audited, it might be better to accept being an employee.

tom on March 24, 2010 at 4:13 PM

My ex-girlfriend has a fairly minor pre-exiting condition and not only was she turned down by every private insurance co and HMO, but when one finally did give her coverage at $400 per month, prescription drugs were excluded (since she had to take medication daily).

My stars, this is getting tedious. It’s insurance, dude, not a prepayment plan. And I’m guessing that if those horrible rapacious companies couldn’t underwrite her at a profit at any price, the condition wasn’t minor.

DrSteve on March 24, 2010 at 4:14 PM

In an otherwise good and balanced report, CBS misses another strange incentive. As listed above, small businesses only become eligible for the credits if their average salary remains below $40,000. That means a decision to give raises not only carries the cost of the raise itself to the business, but also a potential loss of that 35% subsidy ObamaCare grants

This is a great reason why Republicans need to be agents of change that identify and demand improvements to the current legislation. After all, do you really want to learn about this kind of issue from the liberal media?

By replacing the fixed threshold numbers with a simple sliding scale, these problems would be eliminated virtually overnight.

Instead, I’m afraid that we’ll see Republicans talk about nothing other than the unrealistic goal of a repeal (it will never pass the Obama veto). This tactic will help those politicians raise more campaign contributions. But our country will suffer for it.

http://www.nytimes.com/2010/03/23/us/politics/23repubs.html

bayam on March 24, 2010 at 4:17 PM

First of all, let me say we’ll all be looking for your vigorous objection the next time some Democrat complains about any sort of “race to the bottom” scenario. In fact, I’m going to go back and look for any indication you might have given that you objected to sales of insurance across State lines on that basis. Think you could spare me the trouble?

Employers compete for employees, it’s true. But you have to reconsider the magnitudes here. Dick Bus can save $390k by dropping his employees to the exchanges. He might lose some of them to competitors, and this would add some search and training costs. But I suspect these pale in comparison to the savings. In my industry $400k is two senior executives’ salaries, burdened with with benefits, fully billable to overhead or G&A pools (meaning I could commit them to round-the-clock job searches and interviews for me).

DrSteve on March 24, 2010 at 4:07 PM

–As far as I remember, I never objected to the sale of insurance across state lines. But I’ve pointed out that it would be difficult because (i) you need approval of the policy in the state where you’re selling it and (ii) the pricing (and perhaps even the approved terms) would be different than those in the state in which the company is based because of the need for the second state’s approval. In fact, I liked the idea of the national exchange in the House bill (rather than the state-based exchanges in the Senate bill) because it more easily allowed interstate sales. So that should help you.

But, again, here’s my question. Right now, Dick Bus can save $480K a year by dropping coverage, not just $390K. Why wouldn’t he drop it now?

Jimbo3 on March 24, 2010 at 4:18 PM

Maybe robert has a man-crush thing going, ever think of that?

Bishop on March 24, 2010 at 2:57 PM

No, I didn’t. I was just thinking that if I wanted my screen name to be hoochiemama, who would he be to tell me different?

TXMomof3 on March 24, 2010 at 2:59 PM

True. But you’d probably have to turn a hose on blatantblue to keep him at bay.

tom on March 24, 2010 at 4:18 PM

My ex-girlfriend has a fairly minor pre-exiting condition and not only was she turned down by every private insurance co and HMO, but when one finally did give her coverage at $400 per month, prescription drugs were excluded (since she had to take medication daily).
My stars, this is getting tedious. It’s insurance, dude, not a prepayment plan. And I’m guessing that if those horrible rapacious companies couldn’t underwrite her at a profit at any price, the condition wasn’t minor.

DrSteve on March 24, 2010 at 4:14 PM

-My mom couldn’t get post-retirement insurance that covered surgery for some kinds of cysts because she was operated on for them twice in twenty years.

Jimbo3 on March 24, 2010 at 4:19 PM

Obama has blocked drilling off the coast in deeper waters for ten years.

Jimbo3 on March 24, 2010 at 3:41 PM
In your opinion is this a good thing?

thomasaur on March 24, 2010 at 3:46 PM

–Tom, don’t know enough to have a good opinion. Normally, I’d say let’s drill, but there are alot of new techniques being successfully used to get more oil from existing reserves.

What threw me about the “ten years”, BTW, is not understanding how Obama could actually prohibit this for ten years in the future. He’s only got 2.7 or 6.7 more years left and the next person can quickly reverse the order.

Jimbo3 on March 24, 2010 at 4:29 PM

This tactic will help those politicians raise more campaign contributions. But our country will suffer for it.

bayam on March 24, 2010 at 4:17 PM

Our country is going to suffer regardless. You’re probably right, it can’t be repealed (I’ve outlined the reasons here more than once), but that’s no reason to accept this. If the govt does something it isn’t supposed to, letting it get away with it only encourages more transgressions. Weren’t you ever a teenager???

runawayyyy on March 24, 2010 at 4:34 PM

I’m guessing that if those horrible rapacious companies couldn’t underwrite her at a profit at any price, the condition wasn’t minor.

She had a general anxiety condition that had been treated 10 years ago and was easily controlled by medication. Her physical health was outstanding. My brother is a doc and considered her condition minor.

I’m not saying the insurance companies are rapacious, but they are corporations doing all they can do to maximize profits.

bayam on March 24, 2010 at 4:37 PM

But, again, here’s my question. Right now, Dick Bus can save $480K a year by dropping coverage, not just $390K. Why wouldn’t he drop it now?

Jimbo3 on March 24, 2010 at 4:18 PM

I would say at the moment he hasn’t dropped it because it’s an expected practice to offer it. At an earlier point in history it wasn’t. At a future point in history, it might not be again. Consider it a behavioral equilibrium. But those can be perturbed, just as the favorable tax treatment of employer-provided benefits caused the current convention to emerge. Also don’t forget “trembling hands” and the behavior of new entrants with disruptive practices (e.g. Whole Foods’ model).

DrSteve on March 24, 2010 at 4:38 PM

-My mom couldn’t get post-retirement insurance that covered surgery for some kinds of cysts because she was operated on for them twice in twenty years.

Jimbo3 on March 24, 2010 at 4:19 PM

Blame the government.

darwin on March 24, 2010 at 4:39 PM

The same argument was made when the Family and Medical Leave Act was passed seven years ago. It also covers businesess with 50 or more employees and provides for unpaid time off for employee and family health problems. Guess what? The world didn’t end.

Jimbo3 on March 24, 2010 at 2:25 PM

FMLA is unpaid leave. All the employer has to do is pile the extra work on existing employees and/or hire temps to pick up the slack until the worker returns. In the case of maternity leave, this can be planned for well in advance and it hardly causes a ripple in the workplace.

I took FMLA leave when my mom was dying. The first thing the company did was require me to use up all my paid vacation and sick leave, which they have budgeted for anyway. After that, I went on unpaid leave, and I continued doing some work from home. My colleagues filled in the rest. The company barely noticed I was gone.

NoLeftTurn on March 24, 2010 at 4:44 PM

Crop Insurance or Flood Insurance, just try buying either of those from a private insurer.

tmitsss on March 24, 2010 at 4:50 PM

Working as intended.

Daggett on March 24, 2010 at 4:54 PM

-My mom couldn’t get post-retirement insurance that covered surgery for some kinds of cysts because she was operated on for them twice in twenty years.

Jimbo3 on March 24, 2010 at 4:19 PM

How many denial letters did she have to bring you before you paid for her surgery?

Chris_Balsz on March 24, 2010 at 4:56 PM

By replacing the fixed threshold numbers with a simple sliding scale, these problems would be eliminated virtually overnight.

Repeal it. Tear it up. There is no reason to have any central planning impose a scale on business anyhow.

Obama won’t be President in 2013. Repeal it. Tear it up.

Chris_Balsz on March 24, 2010 at 4:59 PM

Why the hell did CBS wait till now to do this “hard-hitting” analysis? This would have been more useful a week ago.

Oh yes, CBS wanted it to pass so they could make money chattering on about it after the fact.

spmat on March 24, 2010 at 5:03 PM

My ex-girlfriend has a fairly minor pre-exiting condition and not only was she turned down by every private insurance co and HMO, but when one finally did give her coverage at $400 per month, prescription drugs were excluded (since she had to take medication daily).

My stars, this is getting tedious. It’s insurance, dude, not a prepayment plan. And I’m guessing that if those horrible rapacious companies couldn’t underwrite her at a profit at any price, the condition wasn’t minor.

DrSteve on March 24, 2010 at 4:14 PM

If the condition was truely minor then take that $400/month and put it in a savings account, buy any prescription meds at walmart for $9 for 3 months and have a hell of a nice nest egg in 5 years. I get so tired of people bitching because they can’t get insurance – you can (and often should) pay for service yourself. Stop asking/forcing the rest of us to pay for YOU!

MidWestFarmer on March 24, 2010 at 5:04 PM

Will ObamaCare drive businesses out of providing health insurance?

DUH. That’s what we’ve been saying.

De-incentivize hiring, raises, growth, etc, and see where it gets us. Great Depression II, here we come.

Animator Girl on March 24, 2010 at 5:07 PM

Businesses with 50 or more workers must offer coverage or pay $750 per worker. That penalty applies for every employee if even one signs up for government-subsidized insurance.

So employee #50 gets a ’50 x $750′ = $37,500 bonus for not asking for government healthcare coverage?

Watch people game that system.

percysunshine on March 24, 2010 at 5:10 PM

What about the mandate that businesses have to offer prescription drug coverage? How will that factor in?

Dhuka on March 24, 2010 at 5:17 PM

She had a general anxiety condition that had been treated 10 years ago and was easily controlled by medication. Her physical health was outstanding. My brother is a doc and considered her condition minor.

I’m not saying the insurance companies are rapacious, but they are corporations doing all they can do to maximize profits.

bayam on March 24, 2010 at 4:37 PM

Wasn’t profit the motive for the insurance company to invent/discover the medicine in the first place? No profit, no medicine. Capitalism = liberty.

Strike Twice on March 24, 2010 at 5:20 PM

Instead, I’m afraid that we’ll see Republicans talk about nothing other than the unrealistic goal of a repeal (it will never pass the Obama veto). This tactic will help those politicians raise more campaign contributions. But our country will suffer for it.

http://www.nytimes.com/2010/03/23/us/politics/23repubs.html

bayam on March 24, 2010 at 4:17 PM

Your concern has been noted. Not actually believed, but c’est la vie.

tom on March 24, 2010 at 5:22 PM

Wasn’t profit the motive for the insurance pharmaceutical company to invent/discover the medicine in the first place? No profit, no medicine. Capitalism = liberty.

Strike Twice on March 24, 2010 at 5:20 PM

Strike Twice on March 24, 2010 at 5:22 PM

As to Jimbo3′s assertion that ‘the world didn’t end with the passage of FMLA’ I am willing to bet that Jimbo3 has never worked in human resources or had to deal with trying to comply with this, or any other, government ‘feel good’ legislation. Having worked in HR for more than 20 years, I could easily give you chapter and verse about why virtually every government mandated employee related initiative comes with expensive administrative burdens, reductions in productivity or inefficient use of resources and a boat load of unintended consequences. I therefore fearlessly predict that ObamaCare will be more of the same, only on steroids.

oogie on March 24, 2010 at 5:28 PM

Pre-existing conditions are causing a lot of people a lot of angst. I’d like to offer a voice of reason.

First, instead of health insurance, let’s look at fire insurance. No one complains that we need fire insurance reform, so it must be pretty good.

Now, if I call up the insurance company to get insurance, and my house is already on fire, would they sell it to me? No. It would be my fault for not planning ahead. The fire department WOULD come put the fire out; but I’d be financially ruined for my lack of prudence.

On the other hand, the insurance company wouldn’t turn me down because I had to have a broken window replaced five years ago. (They MIGHT turn me down if I was breeding fire-juggling pit bulls in my basement; draw your own parallels on some other insurance-related issues).

Where is this going? I think it’s reasonable to tell insurers that they can’t turn people down because they’ve been sick in the past. That will make everyone’s rates go up; but for everyone who buys insurance, the indigent pool shrinks, and we save money on indigent care. And it’s just fair that a person should be able to get coverage, as long as they’re not trying to get coverage for something they’ve already got.

As for those who fail to get insurance, and get sick: we are not barbarians, and we shouldn’t let people die just because they’re stupid, or because they thought they’d let someone else pay for their responsibilities. We should give them care. Not necessarily world-class, state-of-the-art care; maybe a good second-class care, using technology that has been around for a few years and become more affordable, in wards instead of private rooms, using only generic drugs, with more interns, PAs and NPs and fewer MDs. And NO lawsuits — criminal prosecution for practitioners who are negligent, but no awards to patients. Certainly not as good as if you’re insured, but MUCH better than nothing.

But just like the guy who didn’t bother to get fire insurance, the financial penalty should be severe. They should not be able to declare bankruptcy and walk away from the bills. Take their houses and their cars (allow them to own, say, a $2000 car and live in a small apartment until the bill is paid). Make the penalty for not getting insurance high enough, and people will voluntarily get it if they possibly can.

RegularJoe on March 24, 2010 at 5:39 PM

My uncle who owns a cement firm told other family members he intends to pay the fine.
He employs over 150 people in Northern Cal.

What people fail to understand is 0bowma intends for employers to back away from offering health care.
This speeds the full implementation of the government option.
His plan all along.

FireBlogger on March 24, 2010 at 5:42 PM

Isn’t it great that the MSM waited until just after the bill was signed into law to start airing pieces that look into actual consequences for that idiotic bill?

forest on March 24, 2010 at 5:47 PM

Where is this going? I think it’s reasonable to tell insurers that they can’t turn people down because they’ve been sick in the past. That will make everyone’s rates go up; but for everyone who buys insurance, the indigent pool shrinks, and we save money on indigent care. And it’s just fair that a person should be able to get coverage, as long as they’re not trying to get coverage for something they’ve already got.

As for those who fail to get insurance, and get sick: we are not barbarians, and we shouldn’t let people die just because they’re stupid, or because they thought they’d let someone else pay for their responsibilities. We should give them care. Not necessarily world-class, state-of-the-art care; maybe a good second-class care, using technology that has been around for a few years and become more affordable, in wards instead of private rooms, using only generic drugs, with more interns, PAs and NPs and fewer MDs. And NO lawsuits — criminal prosecution for practitioners who are negligent, but no awards to patients. Certainly not as good as if you’re insured, but MUCH better than nothing.

But just like the guy who didn’t bother to get fire insurance, the financial penalty should be severe. They should not be able to declare bankruptcy and walk away from the bills. Take their houses and their cars (allow them to own, say, a $2000 car and live in a small apartment until the bill is paid). Make the penalty for not getting insurance high enough, and people will voluntarily get it if they possibly can.

RegularJoe on March 24, 2010 at 5:39 PM

–The problem with that reasoning is that health insurance companies will generally take the position that, if X happened to you in the past, you’re genetically predisposed to that happening to you again. So they’ve got to price that into their decision to insure. It’s sorta like people who live in a flood plain or some areas near the ocean. If a hurricane hit once, it’ll likely hit again at some point.

FYI, Chris. We were lucky. My mom never need another surgery for her cysts.

Jimbo3 on March 24, 2010 at 5:53 PM

She had a general anxiety condition that had been treated 10 years ago and was easily controlled by medication. Her physical health was outstanding. My brother is a doc and considered her condition minor.

I’m not saying the insurance companies are rapacious, but they are corporations doing all they can do to maximize profits.

bayam on March 24, 2010 at 4:37 PM

Wasn’t profit the motive for the insurance company to invent/discover the medicine in the first place? No profit, no medicine. Capitalism = liberty.

Right… no regulation of structured asset-based securities or derivatives on Wall Street. Massive crash of financial markets as a result. Liberty!

You don’t seem to understand that when someone can’t get health insurance and is one severe health problem away from losing everything- home, savings, retirement- that’s called living in fear, not living in freedom.

bayam on March 24, 2010 at 6:26 PM

Hmmm…cancer survivor (remission for about 15 years now) and current diabetic (diagnosed about 11 years ago). I take massive amounts of insulin and other meds, and see a few specialists regularly throughout the year.

…And yet, despite changing insurance twice, and moving to 2 different states in that time, I’m still fully covered. I haven’t been denied coverage because of pre-existing conditions. I guess it’s because I’m not depending on Medicare for my health coverage.

Did I just win the internetz?

CatsGodot on March 24, 2010 at 6:33 PM

we are not barbarians, and we shouldn’t let people die just because they’re stupid, or because they thought they’d let someone else pay for their responsibilities. We should give them care. Not necessarily world-class, state-of-the-art care; maybe a good second-class care, using technology that has been around for a few years and become more affordable

In making a case for giving care to the uninsured, you hit on one of the major flaws in the current healthcare system. Major medical research studies have proven that the latest tech and most aggressive treatments are statistically less effective, with poorer outcomes, than less advanced, more ‘traditional’ treatments. Case in point- asking your doctor for that latest medication advertised on TV instead of accepting the generic mediation that’s been on the market long enough for its side effects to be fully stutied. (Ask any nephrologist about the time it often takes to identify medications that poison the liver and kidneys.)

Our current system rewards practitioners for test after test and procedure after procedure instead of for results. The cost of healthcare won’t come under control until the market incentives that drive the system change through reform- reform that’s also driven by the market (not the state).

bayam on March 24, 2010 at 6:35 PM

You don’t seem to understand that when someone can’t get health insurance and is one severe health problem away from losing everything- home, savings, retirement- that’s called living in fear, not living in freedom.

No, actually, I lived that. I’m still paying for it, almost 20 years later. (Deductibles for catscans when you’re earning just above minimum wage aren’t free.)

And yet, this Obama”Care” just threw away that freedom. I won’t have a quality health insurance program that I worked my life for to obtain. I will need to bargain with IRS-like agents to assure them that, yes, I really *do* need that much insulin. When I need an MRCP to verify that my liver hasn’t shutdown quite yet, I will need to wait months after I first find symptoms–which, I suppose, is quite cost effective, as you don’t have to worry about treating a dead man.

Right. All of that is the “freedom” that Obama”Care” offers us.

CatsGodot on March 24, 2010 at 6:37 PM

And yet, despite changing insurance twice, and moving to 2 different states in that time, I’m still fully covered. I haven’t been denied coverage because of pre-existing conditions

Not sure why you assume that everyone has your experience or why you seem to implicitly dismiss the well-documented cases of people who cannot get private health insurance. I wouldn’t assume that you’re smarter or superior to people who are denied coverage.

bayam on March 24, 2010 at 6:40 PM

Will ObamaCare drive businesses out of providing health insurance?

That’s Obama’s plan.

faraway on March 24, 2010 at 6:46 PM

Um, yes. And I think they think that is a feature not a bug. Further, I think their real objective is to drive businesses out of business, not just out of health care, but what do I know… I think the Tea Parties are a good idea and Obama couldn’t tell the truth if his life depended on it.

UnderstandingisPower on March 24, 2010 at 7:24 PM

Nothing like actually investigating after the crap sandwich is passed.

aikidoka on March 24, 2010 at 7:32 PM

This entire bill has only one purpose–SINLGE PAYER INSURANCE.

Over the next decade it is designed to destroy our entire system, bit by bit, amendment by amendment so that we end up with a system akin to Canada, Australia, the UK etc by default.

What? You don’t believe me. Obama and several other Dems have said as much.

patrick neid on March 24, 2010 at 7:38 PM

bayam on March 24, 2010 at 6:26 PM

Don’t give me this deregulation garbage, they are more regulations added to the books every year. You do remember Sarbanes-Oxley?
what you don’t seem to understand is that those derivatives were sold in the first place because the government as well as the traders new those assets were toxic to begin with. Why? Because the government forced lending institutions to make loans that they knew couldn’t be paid back, they knew those MBS were worthless. Now they are going to force companies to either pay a fine or dump their policies in favor of government care, which will only reduce services and raise costs. Government doesn’t know what goods and services cost, they don’t produce anything. Do you realize that the government is already the biggest insurer via un-funded programs like Medicaid and Medicare, which also currently denies the most claims.

celtnik on March 24, 2010 at 7:38 PM

Actually, thinking about it, this would be a good end result. If the companies stop providing insurance for employees, the money would end up eventually in either lower prices for everyone, including employees or in the pockets of the employees. Those savings or increased wages could be spent on real health insurance as opposed to prepaid health care which is pretty much what company health benefits are anyways. Then the government could start taxing the remaining company sponsored health care.

astonerii on March 24, 2010 at 7:39 PM

Not sure why you assume that everyone has your experience or why you seem to implicitly dismiss the well-documented cases of people who cannot get private health insurance. I wouldn’t assume that you’re smarter or superior to people who are denied coverage.

bayam on March 24, 2010 at 6:40 PM

I wouldn’t deny that this happens, although I know several more people who have been denied Medicaid/Medicare coverage for pre-existing conditions than I do people denied by private insurers. And these are pretty severe conditons: MS, degenerative lung disease, etc. My good friend has a son who has a serious anxiety problem as well. He’s unable to work, and he should be able to qualify for Medicaid but my friend has jumped through hoop after hoop trying to get him enrolled but they won’t take him. He’s part Cherokee so know she’s trying to get him enrolled with the tribe; they provide pretty decent, comprehensive coverage. In the meantime, she’s paying his doctor’s visits out of pocket. Sort of an aside: He had been on a sliding fee scale but the hospital his doc was affiliated with was bought out and the rules suddenly changed. When she went in to pay the bill, they were like, “That’ll be $165.” My friend was only prepared to pay $90 like usual. When she complained, the billing agent told her she was sorry, those were the new rules. Then my friend happened to mention she was paying cash. Says the billing agent, “Oh, in that case then, $90 might cover it, let me check.” Sure enough, they were more than willing to take the lower fee since it was coming in cash, and they continue to do so.

Anyway, I said all of that to say, I think we can all agree inefficiencies in the system exist. Many of them are the result of pointless regulation, but of course there are people like your girlfriend who fall through the cracks. But then there are people like me who are lucky enough to be healthy and who rarely go to the doctor or use our insurance. I can provide for myself and I’d like to keep doing so. It seems pretty silly to force me onto a public system when I am more than capable of paying my own way. The solution to this “crisis” is to address the discrete problems that do exist — like your girlfriend being unable to get coverage — and leaving the parts that work fine in place as is. I don’t profess to know what the answers are; I’m not a policy wonk. But I do know that the one-size-fits-all approach is bound to create more problems than it solves.

NoLeftTurn on March 24, 2010 at 7:41 PM

This is exactly what I have been saying for 6 months. Large companies pay between $6-$12k per year per employee to provide health insurance. They are all going to HSAs to reduce from 8-12 down to 6-8. (The Senate bill hurts families with HSA with its max $2500 per year investment cap) If a company can pay $750 per year per employee, which sounds better?

Oh, and guess what? They have more incentive to do exactly this, because part timers pay quite a bit more for insurance than full timers, so they rarely sign up. So the company would have to pay the fine for everyone, regardless. So drop the offerings altogether.

William Teach on March 24, 2010 at 7:44 PM

RegularJoe on March 24, 2010 at 5:39 PM

huh?

If you purchase an HO policy and make a claim for every incidental “loss” that you can think of, you will be cancelled. HO policies should be considered catastrophic insurance at best. If you buy auto coverage, do you make claims for routine service? Now compare that to health coverage. If I buy a health policy, why would I abuse it by running off to the doctor for every hang-nail? Private carriers recognized this and placed stipulations on coverage to prevent abuse of coverage. It only makes sense. Believe me the “govment” hc will ration coverage much worse than anything we have now.

jbh45 on March 24, 2010 at 8:02 PM

One thing we can be sure of – those union “Cadillac plans” will be gone by 2018, when the huge tax on them is scheduled to kick in.

darwin-t on March 24, 2010 at 4:05 PM

God forbid, but if the Democrats are in charge, the exemption will be extended… Bank on it…

Which is why they need to be fired, starting in the primaries, but no later than November 2, 2010…

REMEMBER IN NOVEMBER!

Khun Joe on March 24, 2010 at 8:48 PM

Will companies really drop insurance? Yes. It will start happening like an avalanche as soon as the exchanges come on line. Some will start sooner to build reserves to cover the fines.
The company will say “We are very sorry we can no longer offer health insurance in these difficult times. The good news is, “yer git to keep yer job”, the exchanges are now availible and the penalties we have to pay will fund the government subsidies that will help you buy fantastic President Obama approved policies that are better than we can provide.”
If any employees don’t like it they can quit. With unemployment at 27% in construction I personally know many people including myself who would be glad to take their place, without insurance. Until the exchanges are in place and the subsidies start in 2015 the number of uninsured in America will go up and up and up.

oldman13 on March 24, 2010 at 9:13 PM

–Right2bright, many businesses for the last few years have been hiring temporary/consultant/part time employees rather than full-time employees during this downturn. Some of that was way before Obamacare was even on the horizon. How did this bill cause that to happen?

Jimbo3 on March 24, 2010 at 3:01 PM

You don’t understand that gov. stifles business, it doesn’t create business…you didn’t read; government only consumes, it creates or produces nothing?
The temp hiring is to get away from the EEOC mandates, to get away from workers comp…sheesh.

right2bright on March 24, 2010 at 9:32 PM

I was on the board of a small non-profit. Frankly, the premiums were outrageous because of the small pool.

Either the cost or the program….the fact is that small businesses would be better off paying the penalty.

AnninCA on March 24, 2010 at 9:44 PM

As to Jimbo3’s assertion that ‘the world didn’t end with the passage of FMLA’ I am willing to bet that Jimbo3 has never worked in human resources or had to deal with trying to comply with this, or any other, government ‘feel good’ legislation. Having worked in HR for more than 20 years, I could easily give you chapter and verse about why virtually every government mandated employee related initiative comes with expensive administrative burdens, reductions in productivity or inefficient use of resources and a boat load of unintended consequences. I therefore fearlessly predict that ObamaCare will be more of the same, only on steroids.

oogie on March 24, 2010 at 5:28 PM

–I did. I was the general counsel for a large privately-held US company. I had to work through some FMLA issues with HR.

Jimbo3 on March 24, 2010 at 9:50 PM

*shocked face*

not.

ted c on March 24, 2010 at 9:54 PM

AnninCA on March 24, 2010 at 9:44 PM

Yahvull, mein frau.

daesleeper on March 24, 2010 at 10:04 PM

The problem I have with this line of discussion is that I don’t see the economic logic in businesses providing insurance. It is more consistent with free markets for consumers to make their own decisions about purchasing insurance.

thuja on March 24, 2010 at 10:07 PM

You don’t seem to understand that when someone can’t get health insurance and is one severe health problem away from losing everything- home, savings, retirement- that’s called living in fear, not living in freedom.

bayam on March 24, 2010 at 6:26 PM

No. That’s called life. We have to live life not fear it. Is paper money, points in a bank, the building we live in so important that we curl up and die if we can’t have them anymore? That’s no way to live. People lose replaceable material junk every day. The freedom from government that the founders envisioned is more important than any sack of money or pile of sticks. In America we have tremendous opportunity to be successful, we also have the opportunity to fail. When we fail, when we have to start over, when we have to fight, when we have to struggle, we become better, stronger and more noble men and women.
That’s real freedom.

See/ revolutionary war/ civil war/ WW1/ 1929/ WW2/ cold war/ tomb of the unknown soldier

oldman13 on March 24, 2010 at 10:13 PM

When we fail, when we have to start over, when we have to fight, when we have to struggle, we become better, stronger and more noble men and women.
That’s real freedom.
oldman13 on March 24, 2010 at 10:13 PM

This argument is not valid against government aid for an individual’s health care. A seriously sick individual who fails to get good health care often will not become better, stronger or more noble. They may in fact die.

Bad arguments will help us get to a more free market approach for health care.

thuja on March 24, 2010 at 10:34 PM

the government as well as the traders new those assets were toxic to begin with. Why? Because the government forced lending institutions to make loans that they knew couldn’t be paid back, they knew those MBS were worthless

You’re just repeating propaganda. Alan Greenspan and other Republicans on Wall Street would completely disagree with you. I’m sorry, but you don’t understand what caused the housing bubble and financial crisis. You can read Too Big To Fail or a number of other objective books on the crisis.

bayam on March 25, 2010 at 1:41 AM

The goal of the communist party USA, of which one of their top Moscow appointed leaders mentored Obama, is to destroy this nations economic strength and take from those who are condsidered rich and give it to the poor so that everyone can live like the middle class ,or what will become the new middle class that will be almost indistinqhable form what we now consider the poor lower class. I would say he is making all their efforts pay off.

It should also be pointed out that he is doing to our nation what the muslims terroist want done to it. When they crashed the planes into the twin towers they expected out economy to collaspe. He seems to be picking up where they left off. When given the chance to support Islamic ruled countries with terroist activity and dictatorships or constitutional democracies and republics, which one does he chose?

The joke of it all that is becoming so clear is that he is a pawn for those that are using him. He is clueless most of the time, an actor the rest of the time, reading his lines when he gives a speech, making staged apperances and photo ops.
What does he do all day? Has there been any substanital evidence that he does anything that is not done for him to take credit for? We know what he did during the congressional rackateering this past weekend. He watched basketball games. Apparently he does that alot as he knows all the players and games well enough to put up his pick boards. He has time to sit and read some of the things other presidents wrote about their issues and concerns. Perhaps he is thinking of doing the same. Would be interesting to see what a narcissist writes about himself and we can be sure it will be all about himself.

The more you look at him the more you have to wonder just who he is. He claims he is an natural born American citizen but can not produce an legitimate document that proves it or anything that would have envolved his birth. he claims a college education with no funds for it or job history to support it. He claims to have graduated from Harvard law school, but can not understand a simple insurance policy. He claims he taught constitutional law for ten years, yet never mentions it or appears to have any awareness of what it says or what it forbids, as he most recently revealed. As he said, he does not worry about the rules. He just does what he is told and lets the real socilist and communist guide the takeover of our nation.

Franklyn on March 25, 2010 at 2:26 AM

ObamaCare sounds more and more like a series of Five Year Plans, or maybe a Great Leap Backward.

fred5678 on March 25, 2010 at 6:07 AM

The problem I have with this line of discussion is that I don’t see the economic logic in businesses providing insurance. It is more consistent with free markets for consumers to make their own decisions about purchasing insurance.

thuja on March 24, 2010 at 10:07 PM

The only reason employer healthcare is the defacto standard is because of the government imposed wage freezes during WWII. HC was the only way companies could compete for employees.

kerncon on March 25, 2010 at 8:52 AM

Why the hell didnt they just expand/modify Medicare? Its a system already in place, up and running.

johnnyU on March 25, 2010 at 8:54 AM

An arbitrary number of workers is pretty foolish anyway. An accounting firm vs. a law firm vs. a small software company vs. a small manufacturing company vs. a cleaning service…

Sheer stupidity. They all operate at different levels of income, profit, etc…

What we’ll see is more indepenent contractors and temporary workers. Do staffing agencies like Kelly Services now have to offer health insurance to their employees, who are sent out on temporary jobs?

What a mess.

reaganaut on March 25, 2010 at 8:58 AM

One other anti-growth incentive, as Mark the Great points out in the comments: businesses with 50-60 workers have a big incentive now to downsize.

How would you like to be the newest hire at a 50 person company?

reaganaut on March 25, 2010 at 9:00 AM

How would you like to be the newest hire at a 50 person company?

reaganaut on March 25, 2010 at 9:00 AM

How would you like to be the newest hire at a 50 person not get a job at a 49 person company because they can no longer afford it?

kerncon on March 25, 2010 at 9:08 AM

How many denial letters did she have to bring you before you paid for her surgery?

Chris_Balsz on March 24, 2010 at 4:56 PM

Exactly!!! When I’m old a need an operation (or clothes or food or house) my kids better be ponyin’ up the cash.

mmtaz on March 25, 2010 at 9:13 AM

RegularJoe on March 24, 2010 at 5:39 PM

huh?

If you purchase an HO policy and make a claim for every incidental “loss” that you can think of, you will be cancelled. HO policies should be considered catastrophic insurance at best. If you buy auto coverage, do you make claims for routine service? Now compare that to health coverage. If I buy a health policy, why would I abuse it by running off to the doctor for every hang-nail? Private carriers recognized this and placed stipulations on coverage to prevent abuse of coverage. It only makes sense. Believe me the “govment” hc will ration coverage much worse than anything we have now.

jbh45 on March 24, 2010 at 8:02 PM

“Huh?” back at you.

I’m not in favor of government-provided services, for starters. Not sure how you got that idea. I’m also not in favor of hangnail insurance, unless a person CHOOSES to do that and pays the full added cost of that coverage — which I think is dumb (that’s been a big part of the explosion of cost in health care, no doubt).

What I’m saying is that I think it IS reasonable to say that if you want to be in the insurance business, you can’t turn a person down because they had a skin cancer removed 20 years ago, or problems with ear infections when they were a kid. No, they shouldn’t have to take you if you’ve got active cancer; and it’s reasonable for them to charge a higher premium for someone who has a chronic condition like diabetes. But I remember how my mother, who is the picture of health, had to go to MANY insurance companies to find individual coverage after Dad passed on, because she’d had three instances of bladder infection, ten years earlier. Why not go with the standard insurance used to use for employees in group policies: any condition you’ve been diagnosed with or treated for in the previous year is ineligible for coverage for the NEXT year.

And I’m in favor of a “safety net” of coverage for those who are destitute or who planned poorly, that (especially for those who could have gotten insurance but decided to spend the money on other things) doesn’t let them off the hook for paying; but think it should be no-frills, and should be for very big, expensive things (heart disease, not hangnails).

I think you’ve wildly mis-characterized my comments.

RegularJoe on March 25, 2010 at 11:54 AM

bayam on March 25, 2010 at 1:41 AM

OH really, why don’t you give me the cliff notes version and name those other Republicans that disagree with me. Or are you just talking out your ass? While you’re at it, maybe you can explain the benefits of the Community Reinvestment Act.

celtnik on March 25, 2010 at 1:09 PM

My ex-girlfriend has a fairly minor pre-exiting condition and not only was she turned down by every private insurance co and HMO, but when one finally did give her coverage at $400 per month, prescription drugs were excluded (since she had to take medication daily).

And because my son is a boy and 16 and not married, I had to shop very hard to find affordable car insurance for him. You know what made it cheaper when I did get it? The company insures people all over the country in the same pool . . .

If we could buy individual insurance across state lines and got rid of coverage mandates, you could go to an insurance broker, like you do for car coverage, and build your policy the way people build car policies. And they could put you into a company with a very large pool, instead of a small state pool, and get it cheaper.

With government insurance, if your ex-girlfriend’s condition gets too expensive, they’ll tell her to just die . . . That’s what they do in Oregon.

PastorJon on March 25, 2010 at 3:07 PM

Exactly!!! When I’m old a need an operation (or clothes or food or house) my kids better be ponyin’ up the cash.

mmtaz on March 25, 2010 at 9:13 AM

That’s assuming your kids can afford to pay up, and with the economy in shambles they just might not be able to.

There’s also the very real possibility that they won’t. Yeah, I know, it’s long-standing tradition that your kids be your meal tickets in old age…but that’s not guaranteed any more.

Uncle Sams Nephew on July 20, 2011 at 3:01 PM

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