ObamaCare forces Boeing to reduce coverage for employees

posted at 10:55 am on October 19, 2010 by Ed Morrissey

The news yesterday from Boeing that it would cut back its health-care insurance plans and require greater employee contributions got plenty of play as an unintended consequence of ObamaCare, but that’s actually not true.  This is a feature of the Democrats’ health-care overhaul plan, not a bug.  And while it certainly won’t play well with Washington voters, any kind of actual reform would almost certainly have to take a similar path:

Aerospace giant Boeing is joining the list of companies that say the new health care law could have a potential downside for their workers.

In a letter mailed to employees late last week, the company cited the overhaul as part of the reason it is asking some 90,000 nonunion workers to pay significantly more for their health plan next year. A copy of the letter was obtained Monday by The Associated Press. …

Deductibles, the share of medical costs that employees pay annually before their plan kicks in, will go up to $300 for individuals, an increase of $100. For families, the new deductible will be $900, an increase of $300.

In addition, Boeing is instituting a copayment of 10 percent after the deductible has been met. The copayment will rise to 20 percent in 2012.

Those changes will reduce the value of the Boeing plan, but it’s unclear whether that will allow the company to escape the tax looming in 2018.

The impetus for these changes is the so-called “Cadillac plan” tax that penalizes employers who offer virtually no-cost comprehensive plans to their employees.  They will get git with a 40% tax on those plans in 2018, from which Democrats expected to see $238 billion in revenues in the first decade.  That revenue provided critical cover to the notion that ObamaCare would be deficit-neutral in its claims, but Boeing’s action shows just how poor their static tax analysis was.  The 40% tax will force employers like Boeing to pare back their health insurance offerings, and in the end people will have less coverage and the government won’t see much if any at all of that $238 billion in revenue.  ObamaCare will become a huge net burden on the national debt.

However, let’s also be clear that massively comprehensive plans really are a part of the problem in escalating health-care costs.  They completely screen pricing information from consumers, which leads to overuse of the system.  They also shift massive amounts of compensation away from employees and to insurance companies, although employees generally don’t see it because that system has been in place since World War II and the wage mandates from the federal government.  Any real reform effort would have to start at disconnecting the employer-health insurance connection, and in pushing people away from massively comprehensive insurance in favor of HSAs and serious/catastrophic insurance coverage.  Only in that direction can we restore pricing mechanisms that produce supply to meet demand.

Politically, of course, this won’t play well for Patty Murray, who voted for and publicly supports ObamaCare.  Instead of saving her constituents money, about 90,000 of them just got the first bill for ObamaCare, and they’re not going to be happy about it when they go to the polls in two weeks.  Furthermore, those 90,000 nonunion workers will be asking why the unions don’t have to play by the same rules on Cadillac plans.  Those asking those questions are not likely to feel inclined to send Murray back to Washington for another term in office.

Update: I’ve gotten a couple of e-mails informing me that the CBO accounted for this in predicting a shift to higher wages, and that’s true.  Did any of the Boeing employees get raises with this change?  Not that I’ve seen.  If we break the tax-free link between employers and health insurance, wages will rise, but that’s not what ObamaCare does.


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(Don’t) Count it!

/crr6

Chip on October 19, 2010 at 10:58 AM

Open season for government employee insurance is next month, it will be interesting to see what kind of increases there will be to them.

Cindy Munford on October 19, 2010 at 11:00 AM

..90,000 of them just got the first bill for ObamaCare, and they’re not going to be happy about it when they go to the polls in two weeks.

Won’t matter. Bambi says they’re too stupid to make the connection.

BacaDog on October 19, 2010 at 11:01 AM

“We’ve got to pass the bill in order to find out what’s in it” Nancy Pelosi.

Although that’s not quite right. Republicans warned repeatedly that this would happen. Even the unions were a little concerned. Dems didn’t listen.

Idiots.

WisRich on October 19, 2010 at 11:03 AM

The real problem? Rent is too damn high.

amerpundit on October 19, 2010 at 11:03 AM

Dino Rossi could use those 90,000 votes.

Steve Z on October 19, 2010 at 11:03 AM

If you like your coverage, you can keep your coverage.

If you like your doctor, you can keep your doctor.

portlandon on October 19, 2010 at 11:05 AM

The 40% tax will force employers like Boeing to pare back their health insurance offerings, and in the end people will have less coverage and the government won’t see much if any at all of that $238 billion in revenue. ObamaCare will become a huge net burden on the national debt.

Look….some of those “facts”…”science”….and “arguments” that Obama was talking about nobody was getting.

Problem is these “facts” and “arguments” are directly in contrast with the promises Obama made about this government grab of the health system.

Thanks for increasing the cost of Health Care, decreasing the quality of care,and adding to our national debt, during the worse economic times since the great depression liberals.

Baxter Greene on October 19, 2010 at 11:06 AM

I got my bill for next year too. I work for a Fortune 500 company and my costs will increase $3k to $6k next year…

shooten on October 19, 2010 at 11:07 AM

SPEEA/IFPTE Local 2001
=======================

Member Benefits

http://www.speea.org/Medical_Benefits/Medical_benefits.html

canopfor on October 19, 2010 at 11:08 AM

This is a feature of the Democrats’ health-care overhaul plan, not a bug.

Please explain..

However, let’s also be clear that massively comprehensive plans really are a part of the problem in escalating health-care costs.

Why? That’s like saying those million dollar salaries cause inflation or something.

Employers put together a pay package, employees choose which employer they want to work for. A Cadillac health plan does nothing to raise health care costs for the very simple reason that the insurance company prices those plans to cover their costs. The employer calculates the cost of coverage when they evaluate the employee.

A business getting hit with a new tax forces that business to revalue what is being affected by that tax.

Rush Limbaugh going for an implant to correct hearing loss does not affect the cost of a hearing aid I might purchase at WalMart. In fact, Limbaugh might actually lower the cost of a similar implant for the next few people who need one, or even make it possible for Limbaugh’s Doctor to do some charity work.

Skandia Recluse on October 19, 2010 at 11:08 AM

Guys, guys … isn’t this all worth it to give people health insurance where all they had before was medical care whenever they needed it? C’mon. Universal health care must be redistributive in nature … it’s the only way we can take wealth from producers to give to those who don’t.

darwin on October 19, 2010 at 11:09 AM

It’s only FAIR … Everyone needs the same healthcare as the last to swim the river.

tarpon on October 19, 2010 at 11:09 AM

It’s worse than you think – Murray said she helped WRITE the bill!

http://www.examiner.com/conservative-in-spokane/patty-murray-i-helped-write-health-care-law

jdawg on October 19, 2010 at 11:09 AM

I would love to hear interviews with these people about their union co-workers being exempt. I bet it would be great reading.

Cindy Munford on October 19, 2010 at 11:10 AM

If you like your coverage, you can keep your coverage.

If you like your doctor, you can keep your doctor.

portlandon on October 19, 2010 at 11:05 AM

If you like your senator, you can keep your senator.

If you like your representative, you can keep your representative.

cartooner on October 19, 2010 at 11:10 AM

It’s not unusual this year to see BCBS increases from 20 – 55%.

kingsjester on October 19, 2010 at 11:10 AM

shooten on October 19, 2010 at 11:07 AM

Yikes!

Cindy Munford on October 19, 2010 at 11:11 AM

Benefits
===========

For more information about U.S. benefits, please visit our U.S. Benefits Overview. Note that certain Boeing subsidiaries offer benefit plans different from the ones outlined in the overview; individuals considering employment with a Boeing subsidiary should check with that company about benefit plan offerings.

http://www.boeing.com/careers/benefits/

http://www.boeing.com/

canopfor on October 19, 2010 at 11:11 AM

Only in that direction can we restore pricing mechanisms that produce supply to meet demand.

But that isn’t what Cadillac health insurance does. These insurance plans have a cost that IS being paid.

The rising cost of health care is the people who don’t have insurance getting free treatment because the government has ordered medical providers to extend service to people who don’t pay for it.

Skandia Recluse on October 19, 2010 at 11:14 AM

Portlandon, those 2 sentences will be his downfall, along with not raising taxes one single dime…..

cmsinaz on October 19, 2010 at 11:15 AM

unintended consequence of ObamaCare

Is that what they are going to say when the Aerospace business moves overseas?

batterup on October 19, 2010 at 11:16 AM

Microsoft (another WA company) announced similar plans a couple of weeks ago… it’s a shame that the likes of Jay Inslee will be returning to Washington again after so many people their insurance.

dahat on October 19, 2010 at 11:16 AM

Could be a game changer for Dino Rossi.

technopeasant on October 19, 2010 at 11:17 AM

This is all by design. I’m actually afraid to open my 2011 benefits packet I rec’d in the mail yesterday from my employer – also a Fortune 100 company.

CliffHanger on October 19, 2010 at 11:17 AM

Furthermore, those 90,000 nonunion workers will be asking why the unions don’t have to play by the same rules on Cadillac plans.

Did the Cadillac-tax exemption for fatcat unions stay in the Obamacare bill? If so, the time for reckoning will come at the next contract negotiation. It may be time for Boeing to do away with the union and move to right-to-work states.

slickwillie2001 on October 19, 2010 at 11:18 AM

I doubt many will blame Murray on this. Boeing in its mailings did blame obamacare and the Cadillac tax. But they also noted that the cadillac tax is 8 years away and Boeing was going to reduce non-union benefits regardless of obamacare.

Boeing has reduced non-union education benefits and pay as well. Many non-union salaried at Boeing were previously members of either the machinist or engineer unions, and are now looking to leave management / admin and go back to their union jobs.

Elfvis on October 19, 2010 at 11:18 AM

More fall-out from HopeCare,extra-cost will
be passed to the workers,by looks of it!!

Did Obama say FREE!

canopfor on October 19, 2010 at 11:21 AM

This is all by design. I’m actually afraid to open my 2011 benefits packet I rec’d in the mail yesterday from my employer – also a Fortune 100 company.

CliffHanger on October 19, 2010 at 11:17 AM

What’s creepy is my employer hired a company to do “health assessments” on us. They call us at home, ask about exercise, diet … if you have guns in your home …, and try to get you to talk to a “health specialist” to see if they can improve your health. Very creepy.

darwin on October 19, 2010 at 11:21 AM

The headline could benefit Rossi at Murray’s expense, but where are these employees located? Isn’t Boeing’s headquarters in Chicago? Their plants?

txmomof6 on October 19, 2010 at 11:22 AM

Those asking those questions are not likely to feel inclined to send Murray back to Washington for another term in office.

And any threats made by Sebilious about not liking ObamaCare to these folks will probably have no effect either. At least not the effect HHS and the Dark Emperor are expecting.

I think the Dems just lost 90,000 potential voters in WA. Ouch. That will leave a mark.

BobMbx on October 19, 2010 at 11:23 AM

unintended consequence of ObamaCare

No way. They knew this would happen. It’s all about figuring our how to get more people dependent on government. That’s the only goal of the Left. Sick…

CliffHanger on October 19, 2010 at 11:24 AM

This is a huge political mistake for the Dems. Just about everyone who belongs to a large group health insurance plan receives their annual enrollment package for the next year in October.

So just before the mid-term elections, everyone finds out that their health insurance for the following year will cost more for less because of ObamaCare. Brilliant politics.

On the other hand, we really shouldn’t expect the Dems in Congress to know about this. How could they possibly be aware of any details of their constituents’ lives.

SlaveDog on October 19, 2010 at 11:26 AM

I would love to hear interviews with these people about their union co-workers being exempt. I bet it would be great reading.

Cindy Munford on October 19, 2010 at 11:10 AM

Many nonunion were previously union, and are leaving their nonunion jobs to go back to their toolboxes. Won’t save them for long though. Next contract talks will be brutal, and will likely end with another strike, and more work going to right to work states like South Carolina

Elfvis on October 19, 2010 at 11:26 AM

Some presidents have famous quotations such as: “Ask not what your country can do for you….” and “Tear down this wall…”

Here’s another:

If you like your coverage, you can keep your coverage.

If you like your doctor, you can keep your doctor.

Someone should put this on a t-shirt.

visions on October 19, 2010 at 11:27 AM

I will tell you this much. If any Black Panthers decide to show up in front of any voting locations this time to try and intimidate voters, they may be in for the shock of their lives when they face a much larger, far better organized and much angrier crowd then they dealt with the last time.

pilamaye on October 19, 2010 at 11:31 AM

I got a similar letter from my employer. It is up quite substantially this year over last year, and this is just the beginning. I forecast it getting much worse. The bill can’t be repealed until 2012 at the earliest. We are stuck with this albatross for a long long time. Spreading misery, that is what we can expect over the next 4 years as the boot of the government presses on our throats more and more.

James on October 19, 2010 at 11:32 AM

My wife’s employer has reduced our coverage as well. Though, not horribly, yet.

boomer on October 19, 2010 at 11:33 AM

Reality and liberalism meet. Patty has yet to explain how great O-Care is for everyone in her ads. All she’s done so far is try to demonize Rossi.
 
Way to go Patty! Keep up the good work of stealing other people’s money so that you can give it out to your marxist union masters.

ClanDerson on October 19, 2010 at 11:37 AM

ObamaCare didn’t do anything. Boeing actions were all their own. With the bad attitude they have, perhaps the government should take them over and run them more efficiently.

Tommy_G on October 19, 2010 at 11:38 AM

Elfvis on October 19, 2010 at 11:26 AM

I live in two right to work states, Florida & Virginia, so it works for me. Can’t happen fast enough. I am so old I remember when strikes were hateful & violent, I wonder what they will look like today?

Cindy Munford on October 19, 2010 at 11:42 AM

Any real reform effort would have to start at disconnecting the employer-health insurance connection, and in pushing people away from massively comprehensive insurance in favor of HSAs and serious/catastrophic insurance coverage. Only in that direction can we restore pricing mechanisms that produce supply to meet demand.

How about we all have a choice? Our program allows us to choose between an HSA sort of program, or a PSO (our choice – higher deductible, more flexibility in coverage, higher copays). HSA’s are great if you start off when you’re young and can save for future problems. They are a very poor choice once on hits your 50s.

As for “overusing the system”, that is also a bit of a crock. People who work for a living don’t have time to “overuse” the system. Most students are not going to “overuse” the system as they have better things to do than go to the doctor for no reason.

Buy Danish on October 19, 2010 at 11:42 AM

Well I guess since I only pay $79/month towward my family policy, it will be considered a Cadillac plan.
This is the main reason I work here.
It is the main reason many of us work here.
The school I taught at before, I paid $450/month for my share & so at the end of the month, I was clearing $960 as a teacher.
That’s when I started working here.
My school district pays a large % of a family policy bcs they want to encourage teachers with families to come here.
If they have to cut it down, which I wouldn’t blame them, then I will probably go & do something else for a living.
Really sad actually that this is what Obama thinks of as Hope & Change.

Badger40 on October 19, 2010 at 11:48 AM

FYI…Boeing is now a Chicago based company.

Big John on October 19, 2010 at 11:51 AM

Patty Murray is lying through her teeth on what she does in Wash. D.C., compared to what she says on the ground in Washington state.

The voters of the NW state need to wake up.

Schadenfreude on October 19, 2010 at 11:55 AM

Many nonunion were previously union, and are leaving their nonunion jobs to go back to their toolboxes. Won’t save them for long though. Next contract talks will be brutal, and will likely end with another strike, and more work going to right to work states like South Carolina

Elfvis on October 19, 2010 at 11:26 AM

Hi Boeing! Come to Texas. We’re business friendly here! And we have wide open spaces where you can build stuff.

stvnscott on October 19, 2010 at 11:55 AM

In order to keep our expenses low, we will choose less coverage. This could be seen by some as another form of a death panel. Less coverage is less care if we can’t afford that mammo, colon peek or greener food to keep ourselves healthy.

Kissmygrits on October 19, 2010 at 12:02 PM

The voters of the NW state need to wake up.

Schadenfreude on October 19, 2010 at 11:55 AM

It’s why I left the Puget Sound area.
Loved it & hated it.
The liberals have absolutely RUINED that side of the state.

Badger40 on October 19, 2010 at 12:04 PM

Furthermore, those 90,000 nonunion workers will be asking [Murray] why the unions don’t have to play by the same rules on Cadillac plans.

They’ll be asking Claire McCaskill and Russ Carnahan the same question.

Tongueboy on October 19, 2010 at 12:05 PM

I had heard about this last week (must have been rumours) and I’ve been wondering why Dino Rossi hadn’t been gaining in the polls. Now that it is official, you have to expect that Dino will move up quickly…

phreshone on October 19, 2010 at 12:09 PM

This is happening everywhere and the media is trying to smother it. The Georgia State Health Plan is raising premiums over 20%, deductibles are increasing, every part of the health plan is going to cost more. In the decision guide, they state that the new law (odumbocare) necessitates the changes. Where is the outrage and coverage on that? Not a peep from the “Atlanta Urinal and Constipation”. I am sure other states health plans are experiencing the same increases if anybody cares to check.

ultracon on October 19, 2010 at 12:19 PM

The bill can’t be repealed until 2012 at the earliest.

Actually if 2/3 of the house and the Senate can override an ODumbAss veto. And there are a lot of things that can make that happen, although I think it more likely after January 1 2011, than before it.

Even if the GOP doesn’t end up with 67 in the Senate (wouldn’t that be just grand?) some of the more sensible dems, desiring a longer political career, may join with the GOP to turn back the socialist tide.

The idea is not so improbable. The dems really really screwed up and woke he sleeping giant. Not only is he filled with terrible resolve, he has a longer memory than dems care for.

dogsoldier on October 19, 2010 at 12:19 PM

Yep… that’s exactly what we knew would happen. You should start all of these articles with “We said this would happen…” For months we told people that Obamacare would drive up their HC cost and drive down their coverage. Just point and laugh when you lib pals start telling you about losing their doctors.

The Expert Knows
http://theexpertsblog.blogspot.com

HotAirExpert on October 19, 2010 at 12:22 PM

Hey, 90,000 Boeing employees:
How’s that hopey changey thing working out for you now?Just asking…

Khun Joe on October 19, 2010 at 12:25 PM

If you like your coverage, you can keep your coverage.

If you like your doctor, you can keep your doctor.

portlandon on October 19, 2010 at 11:05 AM

If you like your pink slip, you can keep your pink slip.

If you like your bankruptcy, you can keep your bankruptcy.

If you like your foreclosure, you can keep your foreclosure.

If you like your unresponsive elected officials, you can keep your unresponsive elected officials.

If you like all of the bleak prospects for your future, you can keep all of the bleak prospects for your future.

If you like screwing your children and your grandchildren, you can continue screwing your children and your grandchildren.

If you like voting for Demonrats, you can continue voting for Demonrats.

My collie says:

There. FTFY. No need to thank us. Just bein’ neighborly.

CyberCipher on October 19, 2010 at 12:25 PM

Hey, 90,000 Boeing employees:
How’s that hopey changey thing working out for you now?Just asking…

Khun Joe on October 19, 2010 at 12:25 PM

The irony? LOTS of liberal Obama voters within the ranks of the non-union employees. Care to guess who I’ve ALREADY overheard BITCHING about the changes to the healthcare plan?

My collie says:

And I thought whining was MY job.

CyberCipher on October 19, 2010 at 12:28 PM

ObamaCare didn’t do anything. Boeing actions were all their own. With the bad attitude they have, perhaps the government should take them over and run them more efficiently.

Tommy_G on October 19, 2010 at 11:38 AM

Sure, because communism works so well. Just ask Fidel Castro.

jdawg on October 19, 2010 at 12:29 PM

“You can keep your doctor”: Giggle Fits

slickwillie2001 on October 19, 2010 at 12:45 PM

Patty Murray says, “What?”

LASue on October 19, 2010 at 12:53 PM

This was intentional after all.

Obamacare was designed to push people into a Single Payer plan all along.

Step one, make health insurance too expensive.
Step two, the government rushes in to cover the non-insured.

Kini on October 19, 2010 at 1:30 PM

Boeing moved their headquarters to Chicago a couple years ago.

I work for one of the evil, fat cat, greedy health insurance companies. /sarc. Next year, my health insurance costs are going way up. I don’t even want to know how much my costs will be going up.

The Dimrats know, unfortunately, that I have a money tree in my back yard, and I can pick the extra funds from the money tree. No problemo. /sarc

I’m no economist, but I think that come January, when the peoples’ paychecks hit the bank, and they’re a lot smaller, the economy is going to go into a tailspin.

FlatlanderByTheLake on October 19, 2010 at 1:43 PM

this won’t hurt Murray…in fact may help. Most of Boeing’s workforce in WA is unionized…including engineers.

So when they say non-union employees they are talking about those in other parts of the US (Calif, Mo, etc. etc.)

Murray if brazen enough could use this to show why check want card check…everyone should be unionized so that Barry won’t hurt you.

r keller on October 19, 2010 at 2:03 PM

ObamaCare didn’t do anything. Boeing actions were all their own. With the bad attitude they have, perhaps the government should take them over and run them more efficiently.

Tommy_G on October 19, 2010 at 11:38 AM
Sure, because communism works so well. Just ask Fidel Castro.

jdawg on October 19, 2010 at 12:29 PM

I actually assumed the sarc tag was missing.
Was it? Tommy surely cannot be serious.

Badger40 on October 19, 2010 at 2:05 PM

Shut yer suck and pay up you friggin racists! It’s our obligation to pay for all the Aunt Zatoodies here today :-)

Alden Pyle on October 19, 2010 at 2:06 PM

Barry’s hut brother smiles.

BHO Jonestown on October 19, 2010 at 2:12 PM

However, let’s also be clear that massively comprehensive plans really are a part of the problem in escalating health-care costs.

To a degree, that’s true. But look at it from another perspective. I have a child with chronic health problems. That means for my family, the “cadillac plan” my employer offers is cheaper (overall) than the less comprehensive plans with higher deductibles and higher out-of-pocket maximums. With no cadillac plan, I end up paying less for insurance, but have to pay even more to make up for the loss of coverage.

taznar on October 19, 2010 at 2:26 PM

If you like your health care plan, you can keep your… Oh, who am I kidding? You’re screwed!

Just remember who screwed you come November.

Merovign on October 19, 2010 at 2:46 PM

Hi Boeing! Come to Texas. We’re business friendly here! And we have wide open spaces where you can build stuff.

stvnscott on October 19, 2010 at 11:55 AM

Yep, lots of space around Alliance Airport north of Fort Worth. You just have work it in around the gas wells of the Barnett Shale.

Ward Cleaver on October 19, 2010 at 4:43 PM

let’s also be clear that massively comprehensive plans really are a part of the problem in escalating health-care costs. They completely screen pricing information from consumers, which leads to overuse of the system.

Wrong. Just because the employee is not paying for it the real costs of those plans are priced accordingly and the company then chooses to buy them or change them. The company determines the if they want to buy those plans or not (if the benefit is worth buying to fit their HR needs). The Cadillac plans are expensive for a reason and their supposed overuse as contribution to the rising costs of healthcare is compensated in those high prices that are adjusted annually.

nolapol on October 19, 2010 at 5:53 PM

My message to Patty Murray a at a Tea Party rally this year.

sweet pea on October 19, 2010 at 8:53 PM

let’s also be clear that massively comprehensive plans really are a part of the problem in escalating health-care costs. They completely screen pricing information from consumers, which leads to overuse of the system.

Really think so, Allah?
I’m sorry, but I really doubt that is the huge reason why health care costs have sky rocketed.
Why don’t we focus on the real culprit here: GOVERNMENT HEALTH CARE PROGRAMS that LIMIT the AMOUNT PAID FOR SERVICES.
Hospitals & Drs gotta make up the lost revenue somewhere.
Also, let’s consider government regulations i.e. OSHA that drive up costs.
Let’s consider TAXES & FEES that make hospitals etc hire accountants.
Let’s consider LAWSUITS that raise the cost of malpractice insurance & also makes hospitals hire expensive lawyers.
These are the problems, as well as ILLEGALS getting FREE HEALTH CARE in emergency rooms.
There are probably very few people who use their Cadillac plans to visit the Dr unneccesarily.
Who in hell in their right mind wants to go to the Dr when they don’t have to?
I have a Cadillac plan & I don’t want to go everytime I have a sniffle. All those $25 co-pays add up.
And though my plan covers quite a bit, my 1st mammogram ended up costing me a decent chunk of change, along with a heart ultrasound that I had to get.
I don’t enjoy any of that & I sure as hell don’t enjoy paying for any of it.

Badger40 on October 20, 2010 at 7:29 AM