Surprise! MassCare mandates incentivize employers to end health-care coverage

posted at 10:12 am on July 19, 2010 by Ed Morrissey

If Massachusetts is the laboratory for ObamaCare, consider this an explosion.  The Boston Globe reports that employers have begun doing precisely what everyone knew they would do when insurance prices spiked: dump health plans.  Companies that used to offer health-care coverage are paying the fines and saving money by dumping their employees into state-run coverage (via Newsalert):

The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budget.

Since April 1, the date many insurance contracts are renewed for small businesses, the owners of about 90 small companies terminated their insurance plans with Braintree-based broker Jeff Rich and indicated in a follow-up survey that they were relying on publicly-funded insurance for their employees. …

The Massachusetts Division of Health Care Finance and Policy annually surveys employers and found no significant drop in coverage as of the end of 2009, when more than three-quarters of companies offered health insurance.

But insurance brokers say the pace of terminations has picked up considerably since then among small companies, of which there are thousands in Massachusetts. Many of these companies — restaurants, day-care centers, hair salons, and retail shops — typically pay such low wages that their workers qualify for state-subsidized health insurance when their employers drop their plans.

“Those employers are trying to keep their doors open, and to the extent they can cut expenses, they will cut health insurance because they know their people can go to Commonwealth Care,’’ said Mark Gaunya, president of the Massachusetts Association of Health Underwriters, a trade group representing more than 1,000 brokers and other insurance professionals.

Actually, in Massachusetts it may be more of a race to see who gets to the ultimate finish line first.  Will businesses under extreme economic duress and competitive pressure start dumping employee health insurance coverage before health insurers go out of business?  Governor Deval Patrick countermanded rate hikes from major insurers this year, which means they have no way to cover the rising costs created by the must-insure mandate and other legal restrictions in Massachusetts.  The question will probably be what will come last — the barbecued chicken or the scrambled egg.

Otherwise, the economics are rather simple.  Employers face a fine of less than $300 per employee not covered by health insurance.  They have to pay thousands per employee every year for the insurance. In this economy, which option will look best — especially when a company’s competitors dump coverage to keep prices low?  Anyone who has run a business can answer that question easily.

The same exact incentives exist in ObamaCare, as CBS belatedly discovered after its passage.  With the Senate and the White House eyeballing price controls for health insurance, the federal system will have the same perverse incentive structure as Massachusetts, and businesses will eventually respond to them in ways that will create a de facto single-payer system in the US.  That appears to be more like a designed outcome than a policy mistake as Barack Obama and Congress follow the Massachusetts playbook.


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MassaCare.

moonbatkiller on July 19, 2010 at 10:14 AM

Wow! Now that’s unexpected!

darwin on July 19, 2010 at 10:14 AM

Having this on a national scale is going to be so exciting.

Bishop on July 19, 2010 at 10:14 AM

scooped you by a day.

ed, if you read my blog everyday then you and your readers would be up to speed!

reliapundit on July 19, 2010 at 10:16 AM

Problem is, if they manage to smash our current system before we can repeal Obamacare, there’ll be nothing to go back to. We’re stuck then.

S. Weasel on July 19, 2010 at 10:18 AM

How many lies have we discovered about Obamacare in the past week?

kingsjester on July 19, 2010 at 10:18 AM

It’s all good. Price controls are the answer.

a capella on July 19, 2010 at 10:19 AM

You know this scares the heck out of people in their late 50s like me, who now have no idea what is going to happen to their health care. I’m all for helping people who don’t have insurance but this doesn’t sound like it’s helping anyone but the government.

scalleywag on July 19, 2010 at 10:20 AM

This should help Romney’s future presidential campaign, shouldn’t it?/

kingsjester on July 19, 2010 at 10:20 AM

I love it when a plan comes together.

WashJeff on July 19, 2010 at 10:22 AM

Employers face a fine of less than $300 per employee not covered by health insurance. They have to pay thousands per employee every year for the insurance. In this economy, which option will look best — especially when a company’s competitors dump coverage to keep prices low?

this is just another revenue stream for the government. Employers and/or employees are forced into an either/or decision: either buy the insurance, or pay the fine whichever is the cheaper. Well, if the fine is cheaper..cha ching… the government makes out. They’ll make out doubly well when they fail to provide care—they’ll foist “preventive” programs and other items upon citizens that guard them from having to actually provide healthcare that people would actually want. It’s a terrible deal, no matter how you slice it. The citizens will pay twice, first with their money, the second with their health…

ted c on July 19, 2010 at 10:22 AM

Every now an again I wonder this…

If Romney is standing on the debate stage in 2012 and swears up and down that he will help repeal ObamaCare and that he will sign a repeal bill, will I be able to believe him?

myrenovations on July 19, 2010 at 10:24 AM

Having this on a national scale is going to be so exciting.

Bishop on July 19, 2010 at 10:14 AM

Because who wouldn’t want to entrust the health of themselves and their family to the federal government?

Doughboy on July 19, 2010 at 10:25 AM

When you have a president and administration who are incapable of the truth, who could be surprised by this. I wonder how Stupak and his pro-life suckers, who sold out, like the federal funding of abortions that are in it too. The biggest disaster in healthcare history was because of a betrayal of a president to get it passed.

volsense on July 19, 2010 at 10:28 AM

That appears to be more like a designed outcome than a policy mistake as Barack Obama and Congress follow the Massachusetts playbook.

Appears to be?

ladyingray on July 19, 2010 at 10:29 AM

Wethal: You beat me to the punch. I was just now going to post that link re Berwick and his bloated PR budget, as well as his multi-tentacled connections to Soros.

onlineanalyst on July 19, 2010 at 10:30 AM

This should help Romney’s future presidential campaign, shouldn’t it?/

kingsjester on July 19, 2010 at 10:20 AM

I think I’d like to see a Secretary of Treasury Romney replacing Geithner. But Romneycare is precisely why Romney cannot be the GOP nominee. It gives away a huge issue, no matter how much Romney blames its problems on its implementation and administration after he left office.

BuckeyeSam on July 19, 2010 at 10:30 AM

If Romney is standing on the debate stage in 2012 and swears up and down that he will help repeal ObamaCare and that he will sign a repeal bill, will I be able to believe him?

myrenovations on July 19, 2010 at 10:24 AM

I certainly would not believe it. I truly hope we can get a better candidate than that for 2012 although that is a bit ahead of the game right now.

jwolf on July 19, 2010 at 10:33 AM

Wethal: You beat me to the punch. I was just now going to post that link re Berwick and his bloated PR budget, as well as his multi-tentacled connections to Soros.

onlineanalyst on July 19, 2010 at 10:30 AM

I look forward to so much if the GOP takes the House (Judiciary hearings on New Black Panthers, for example), but I would also like to see House Appropriations Committee subpeona in Berwick. He ducked a confirmation hearing with the recess appointment, but he probably could not duck a committee subpeona.

Wethal on July 19, 2010 at 10:34 AM

Employers face a fine of less than $300 per employee not covered by health insurance.

Simple solution to be proposed by anonymous Romney supporters, just up the fine tax!! It keeps people insured and helps government grow!! Best of both worlds!!

dtestard on July 19, 2010 at 10:35 AM

The question will probably be what will come last — the barbecued chicken or the scrambled egg.

With respect, Ed, both of these are tasty dishes, good to eat. We need a metaphor which aptly conveys the lose-lose nature of both MassCare and its national incarnation. I suggest “the salmonella chicken or the rotten egg.”

jwolf on July 19, 2010 at 10:36 AM

The other extreme isn’t pretty either: penalties higher than the cost of insurance but the cost of insurance so high that companies go out of business.

Or price controls where insurance companies can’t cover expenses and they go out of business.

All 3 solutions rot which to me means government should stay out of it all together or just focus on what they can do to make things better: tort reform and insurance across state lines

journeyintothewhirlwind on July 19, 2010 at 10:41 AM

“If you like your health care plan, you can keep your health care plan.”

Another “Obama-promise” with an expiration date.

Rovin on July 19, 2010 at 10:43 AM

Obama voters in a nutshell.

hoosiermama on July 19, 2010 at 10:44 AM

How many lies have we discovered about Obamacare in the past week?

kingsjester on July 19, 2010 at 10:18 AM

Maybe Hotair should make that a new feature here: Obamacare Lies Of The Week

pilamaye on July 19, 2010 at 10:45 AM

And the 4th solution- complete government run healthcare is unacceptable. If it happens it will come with a VAT on top of income and property tax and it will be not be 1-10%, it will be 20% or higher.

journeyintothewhirlwind on July 19, 2010 at 10:46 AM

pilamaye on July 19, 2010 at 10:45 AM

Not enough bandwidth

Rovin on July 19, 2010 at 10:47 AM

“If you like your health care plan, you can keep your health care plan.”

Another “Obama-promise” with an expiration date.

the kicker is that the health care plan just may not keep you…..

troof.

ted c on July 19, 2010 at 10:48 AM

Because who wouldn’t want to entrust the health of themselves and their family to the federal government?
Doughboy on July 19, 2010 at 10:25 AM

Exactly. I feel confident that Shumer can not only tackle the problem of Iphone antennas but also health care for me and mine; politicians are just smarter than the rest of us.

Bishop on July 19, 2010 at 10:49 AM

Amazing how this information was completely unavailable just three months ago.

paul1149 on July 19, 2010 at 10:55 AM

MassCare

RomneyCare. Don’t deny it the name of it’s father.

portlandon on July 19, 2010 at 10:56 AM

My younger son works for a national pharmacy/drug store. Upon passage of Obamacare they lowered the perimeters of what they covered. I am taking the big leap that it is so they will not meet the minimum requirements mandated and will chose the fine over offering coverage. I am close to using the hate word.

Cindy Munford on July 19, 2010 at 10:56 AM

Article at the NY Times:

Insurers Push Plans That Limit Choice of Doctor

Wow NYT. You’re late to the game.

CWforFreedom on July 19, 2010 at 10:56 AM

The plan to destroy private insurance continues apace.

Soon we will all have gubmint medical care. We should all be grateful to the ruling class for this boon. How did we survive before the government and the ruling class took care of us?

novaculus on July 19, 2010 at 11:00 AM

I am close to using the hate word.

Cindy Munford on July 19, 2010 at 10:56 AM

If someone pushes Mrs. Munford to the point of hate, that person has crossed the line of by about 100 miles.

portlandon on July 19, 2010 at 11:02 AM

All together now: we’re boned!

Insomniac on July 19, 2010 at 11:05 AM

That appears to be more like a designed outcome than a policy mistake as Barack Obama and Congress follow the Massachusetts playbook.

And this is somehow news to anyone?

Koa on July 19, 2010 at 11:07 AM

Democrats want you to die quickly.

TN Mom on July 19, 2010 at 11:11 AM

Because who wouldn’t want to entrust the health of themselves and their family to the federal government?
Doughboy on July 19, 2010 at 10:25 AM

Exactly. I feel confident that Shumer can not only tackle the problem of Iphone antennas but also health care for me and mine; politicians are just smarter than the rest of us.

Bishop on July 19, 2010 at 10:49 AM

Chuck Shumer is also really good at writing letters causing panic (IndyMac) bank customers to withdrawl all their money. Hope he doesn’t write a letter about my doctor!

TN Mom on July 19, 2010 at 11:18 AM

Pinnochiocare is styled after Romneycare? Great!

If you like your present insurance you won’t be able to keep it, if you do it will cost you more, and who knows what about quality, take a guess.
If this all sounds good just close your eyes throw a dart, or play pin the tail on the Donkey and pick Pinnochio or Romney in 2012!

Romeny would make a great czar in charge of shutting down entire Gov’t agencys that President Palin puts on the chopping block!

dhunter on July 19, 2010 at 11:18 AM

Article at the NY Times:

Insurers Push Plans That Limit Choice of Doctor

Wow NYT. You’re late to the game.

CWforFreedom on July 19, 2010 at 10:56 AM

Note also how the NYT nicely frames the story so it’s the fault of the insurance companies, not Congress and the President.

jwolf on July 19, 2010 at 11:20 AM

a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budget.

Just as “some” say that the sun “could” rise tomorrow.

Count to 10 on July 19, 2010 at 11:24 AM

Are the Demrats, Rinocrats and State-run Media still trying to pretend this Government takeover of healthcare and destruction of Private Insurance is a good deal for someone/anyone who already had own plans no matter what they were?

dhunter on July 19, 2010 at 11:29 AM

Mass-a-cre….

something ironically prophetic about that.

ted c on July 19, 2010 at 11:32 AM

It’s almost as if the exact arguments of the opponents of ObamaCare (ie, the majority of the American public) knew that this was not only the end result of a Democrat takeover, but the intended result.

Stupid illiterate known-nothing racist wingnut bumpkins!

Good Lt on July 19, 2010 at 11:41 AM

seriously, i’m a really happy, positive optimistic person and yet when i read the economic news and stuff like this, I feel like we’re on the edge of some sort of economic apocalypse.

WashingtonsWake on July 19, 2010 at 11:47 AM

Democrats, creating a world in which you offered a slim chance to succeed in spite of them, upon which you are taxed back into line.

America, RIP.

NickelAndDime on July 19, 2010 at 11:47 AM

I think it is their plan to eventually get to single-payer.

Sven on July 19, 2010 at 11:48 AM

ObamaCare = built to fail.

GarandFan on July 19, 2010 at 11:53 AM

I think it is their plan to eventually get to single-payer.

Sven on July 19, 2010 at 11:48 AM

That’s been the plan all along, they just have to break the insurance companies quickly before any chance of repeal…

and they may pull it off.

Tim Zank on July 19, 2010 at 11:57 AM

Problem is, if they manage to smash our current system before we can repeal Obamacare, there’ll be nothing to go back to. We’re stuck then.

S. Weasel on July 19, 2010 at 10:18 AM

Yep. And let me tell you, as someone who has an eye on the health insurance industry, things are not looking good. For all the horror stories out there, There are 100 more million dollar babies. Many people don’t realize the margins are pretty thin and the overhead is WAY lower than SS/Medicare/Medicaid. cloward/piven in action.

WitchDoctor on July 19, 2010 at 12:03 PM

Commerce Clause!

Del Dolemonte on July 19, 2010 at 12:24 PM

It’s not MassCare my friends. Let’s be perfectly clear …

THIS IS ROMNEYCARE!

HondaV65 on July 19, 2010 at 12:28 PM

Come on people… The only way to make peoplenot only accept a shidt sandwich but to prefer it, is to make things SOOOO Shidtty that they’ll clamor for the one with some peanut butter on it.
Things are going to get sooo bad, we’ll look back at this time as a peanut butter and shidt sandwich.

But its still shidtty peanut butter.

44Magnum on July 19, 2010 at 12:37 PM

And yet, there are still people who want the nimrod who created this debacle to be President!

Might as well keep Obama … there isn’t a whole lot of difference!

gary4205 on July 19, 2010 at 12:44 PM

When all is said and done, we’ll be going to veterinarians for our health care. *sigh*

capejasmine on July 19, 2010 at 12:45 PM

When all is said and done, we’ll be going to veterinarians for our health care. *sigh*

capejasmine on July 19, 2010 at 12:45 PM

Off shore hospital cruise ships started by enterprising doctors who accept only cash or gold coins (preferably gold)

dhunter on July 19, 2010 at 12:47 PM

Quick! Everybody rally behind Flip Flopney so he gets the nomination!

He’s electable!

Kensington on July 19, 2010 at 2:21 PM

90 down… How many more 1,000s to go?

Big surprise…

Khun Joe on July 19, 2010 at 2:33 PM

Gas price controls in the 70s = shortages
Electricity price controls in California = shortages
health insurance price controls = do the math

Despite the fact that it should be covered under 9th & tenth amendments, and the fact that it’s not an enumerated power, we evidently need another amendment to point out that Congress Shall Not Set Prices for Private Market Products.

They can’t keep their damnable hands off it, and it does nothing but harm.

Merovign on July 19, 2010 at 3:40 PM

Mitt “I like mandates” Romneycare was unavailable for comment. NO phone reception in his super secret bunker.

james23 on July 19, 2010 at 4:56 PM

Boy, sure glad they rushed to pass this nightmare so about the only people left in the nation who would have health care would be the politicians.

englishqueen01 on July 19, 2010 at 5:10 PM