Study: ObamaCare will push employers to end health coverage
posted at 1:55 pm on June 7, 2011 by Ed Morrissey
Since the beginning of the debate over health-care reform, opponents of ObamaCare warned against the unintended consequences of setting up a mandate-and-subsidy system in place of the more free-market approach applied by existing state legislation. If the federal government provided subsidies in the form of refundable tax credits to the middle class to pay for health insurance, businesses burdened by expensive coverage costs would take the opportunity to exit the current model, throwing tens of millions onto what essentially amounts to government welfare rolls. Supporters claimed that businesses would ignore the clear cost benefit of abandoning insurance out of a sense of labor competition, and the administration’s cost estimates for the first ten years were predicated on a low rate of retreat.
According to a new study, the Democrats have guessed wrong — and that could cause subsidy costs to be tripled over initial estimates:
The more a company knows about coming changes to the nation’s health care laws, the more likely it is to consider radically restructuring the way it provides insurance to employees, according to a study by the consulting firm McKinsey and Co.
The study, which is being circulated among Republicans, predicts that as many as 30 percent of companies will stop offering health insurance benefits, reduce the level of benefits, or offer benefits only to certain employees. If this prediction holds, the number of Americans who could see changes to their health insurance would be far more than the 9 million to 10 million estimated by the Congressional Budget Office.
That means that the cost of subsidizing plans for those people—about $19 billion a year, according to the CBO—could more than triple. And, if the report’s predictions are borne out, many Americans would lose their health insurance.
National Journal reports that most people won’t be too bothered by such a move, especially if they get a raise to partly offset the drop in compensation. Why? In part, people judge the compensation by the dollar value of their salary, but also because workers will believe they’ll end up ahead of the game. Although they’ll have to pay out of pocket for coverage, the extensive subsidies provided by Uncle Sam will make the choice look cheap.
Unfortunately, that’s only true if workers don’t consider the hidden costs of the subsidies themselves. That money has to come from somewhere, and it’s going to come in either higher taxes or bigger deficits, or both. The net result either way is to add trillions more in entitlement liabilities when our current liabilities are already spiraling into the realm of irrational numbers. That will cause the dollar to continue to decline, eroding the buying power of everyone but especially the working class that thinks a government freebie is a bargain.
Who coulda thunk this? Well … it’s really not that difficult to do math, except apparently in Washington DC.
Blowback
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See? That’s you being antisocial. And nasty.
Lourdes on June 7, 2011 at 3:45 PM
And the point of the article is that the government did not project this much decoupling. Expect more taxes to cover for it.
Chuck Schick on June 7, 2011 at 3:47 PM
No. I’m not. I’m advocating that your health care not be directly linked to who you work for. Changing jobs should not mean losing your access to a health care plan. The two have no direct or logical connection.
dieudonne on June 7, 2011 at 3:50 PM
Ed, you’re assuming they didn’t want this to happen. Incorrect assumption. This is the law of intended consequences.
jnelchef on June 7, 2011 at 3:51 PM
Saying that I’m anti-social is a fair cop but it’s neither here nor there as far as the issues being discussed. And it still doesn’t change the fact that I’m not a Marxist but you seem stuck on tagging people you disagree with or don’t like with that label no matter how incorrect or inappropriate.
dieudonne on June 7, 2011 at 3:53 PM
So instead, we now will have people keeping their job and losing their healthcare. Or both.
Chuck Schick on June 7, 2011 at 3:55 PM
I do expect that in the mean time. It doesn’t have to remain that way – I’ll find out with everyone else after November 2012.
dieudonne on June 7, 2011 at 3:55 PM
Or losing both, I should say.
Chuck Schick on June 7, 2011 at 3:56 PM
I’m not expecting the situation to be the same after the elections – but I’m also not sure what to expect. The GOP hasn’t exactly overwhelmed us with specifics and much of the base is content with calls for repeal wihtout following up on what will replace it.
dieudonne on June 7, 2011 at 3:58 PM
sorry. That was supposed to be in reference to your comment at 3:55 and not the one I quoted.
dieudonne on June 7, 2011 at 3:59 PM
And what does that mean- you guys are going to try to cram even more unpopular and destructive legislation down our throats?
Chuck Schick on June 7, 2011 at 4:00 PM
Give your insults a rest, please. No one here is interested in them.
Lourdes on June 7, 2011 at 4:00 PM
How about we start with nothing? Certainly better than ObamaCare.
Chuck Schick on June 7, 2011 at 4:01 PM
And I’ve twice explained in more detail than is necessary how that could and should be amplified, not discontinued.
Placing “healthcare” in the hands of government and out of the private sector ruins medical care and is what “Obamacare” is all about.
The Left denounced any variations on private sector care and insurance provisions, which leaves — if not “employer based” — some intermediary and government is that intermediary in our civilization, unfortunately.
What I’ve explained twice here (now thrice, with these comments) is that medical care and “health benefits” (read, insurance) should remain in the private sector and controlled more by individuals, with the added idea of employer cosponsoring or contributions. The individual, then, takes their “healthcare” account with them wherever they’re employed.
The key issue here is free market control, not government control. But without group policies — what is available through employers or rare co-ops — private insurance is beyond the affordable reach of most especially those with chronic medical needs.
So it’s wasteful and irresponsible to cavalierly endorse and support “doing away with employer based healthcare” because it’s a proven, workable, successful model for millions of people. Modifying that process would make far more sense than tossing it aside, which is what Obamacare inttends to do and is what the Left is seeking: that means government provided healthcare, which means, public healthcare for all, which is a step down from what Medicaid is today.
Lourdes on June 7, 2011 at 4:07 PM
Let’s check the record here. Have I at any point in this thread advocated for centrally planned health care? No. Have I advocated for the Obama plan? No. Have I made any policy prescription other than “it’s good to decouple health care from who employs you and that should be a part of whatever reforms are enacted from here on out” ? No.
dieudonne on June 7, 2011 at 4:08 PM
It already has.
I am a full or half owner of 6 businesses. All of them employ moderately skilled workers. For many years I provided them with free mini-med plans. I had to stop providing them this year thanks to ZeroCare. I gave them all a modest raise equal to what I paid for their plans. Now they are on their own. I restructured my legal entities to avoid the ZeroCare penalties, and I am offering nothing from here on out.
Thanks Zero!
stvnscott on June 7, 2011 at 4:09 PM
Yeah, right. And it’s the Republicans that want to bring back the Jim Crow laws, too. No hate in pointing that out, is there?
iurockhead on June 7, 2011 at 4:12 PM
I don’t believe that actually need employer or governmentally based intermediaries. Let self-associated groups, co-ops, and states serve in that role. Let the states be the great labs of the republic and make it as private, individual, and local as possible.
dieudonne on June 7, 2011 at 4:12 PM
I’d say it’s going to do a good job of decoupling health care from you, full stop.
Midas on June 7, 2011 at 4:15 PM
Didn’t answer my question. Why do we have to wait till 2012? Do you really think you’re going to get a shot at ObamaCare II?
Chuck Schick on June 7, 2011 at 4:15 PM
“dieudonne on June 7, 2011 at 4:12 PM
docflash on June 7, 2011 at 4:20 PM
we wait for 2012 because democrats are clearly not goi to dismantle it and there are simply not enough votes in the Current congress to repeal it and overcome the inevitable presidential veto. 2012 will give us a new congress with new votes and a chance at flat repeal (unlikely) or reform (currently undefined).
dieudonne on June 7, 2011 at 4:21 PM
Do not demand the same respect from people that you refuse to give.
You’ve ignored several responses on page 1 and playing the victim is an emotionally retarded tactic.
fossten on June 7, 2011 at 4:21 PM
I sometimes wish I had half of his hair but we are otherwise unconnected.
dieudonne on June 7, 2011 at 4:23 PM
\
Haha. This is the same argument I always hear from your ilk. You know apart from a few shining points, the overall bill sucks and will inevitably make things far more expensive. But at least we can’t repeal it!
Chuck Schick on June 7, 2011 at 4:27 PM
Are you serious? You said goodbye and dismissed me and now you want to whine that I don’t acknowledge responses? I respond to people that address me directly and aren’t merely repeating dismissive derisive retreads. If you’re essentially saying the same thing as someone else and I’ve already replied to it you shouldn’t expect a repeat performance for your individual satisfaction.
dieudonne on June 7, 2011 at 4:28 PM
I’ll support repeal when I hear what will replace it. Congress abhors a vacuum and will enact other legislation – I’m not foolish enough to believe that they will replace it with “nothing” and I’m cynical enough to think that what replaces it could be even worse if no details are discussed.
Let’s also not forget that part of the reason this feeble pap was passed in the first place was because sweeping numbers of people were dissatisfied with health care as it was. That means reform of some sort is on the table whether I want it or not. Now it’s just a matter of determining what those changes will be, what will be reversed, and what new reform will be introduced.
dieudonne on June 7, 2011 at 4:35 PM
You people passed reform. People hate it. None of the predictions are close to coming true so far. It’s clearly going to increase the deficit and premiums are going through the roof (59% hikes here in CA for Blue Shield as of 2011). Rightfully your lying party was thrown out of office in a historic repudiation last year.
Did I miss anything?
Chuck Schick on June 7, 2011 at 4:40 PM
This was calculated and very wrong. Failbama’s pals got nice waivers though.
It’s time to repeal this piece of crap. And no we never actually needed anything like it. The system we had before worked, even for illegals. (That bit needs to end.)
dogsoldier on June 7, 2011 at 4:46 PM
Nailed it in one, Chuck. The socialists won’t give up easily though.
dogsoldier on June 7, 2011 at 4:47 PM
Quite a lot. My people did not pass reform. I hate the reform that was passed. Witness my referring to it as feeble pap above. It’s also ill-conceived.
You also seem to confuse “show me what you’ve got” with “I’m in love with what we have!!1!1!”.
You also seem to confuse people being able to count votes in the congress and not being able to get a sum of 2/3 to override a presidential veto as some sort of support for the bill in question. It’s isn’t.
Not matching your zeal doesn’t make me a Democrat or a Marxist. It means I can count using fractions and that I’m familiar with the rules for executive veto.
dieudonne on June 7, 2011 at 4:48 PM
And stop subsidizing it via the tax code.
Remove all incentives, write-offs, write-downs, exemptions, every single thing that distorts the medical market because not one bit of it is doing us any good. Every time we subsidize something we must re-learn the lesson that whatever is subsidized gets over-utilized and under-valued because you do not pay the full cost of it. Government has been shirking the paying up bit for decades and we are surprised the cost of medical care goes up? Well look at the slackers… not the poor, not those without insurance, but those getting government ‘help’.
Charity is far more cost effective than the government and cheaper, besides.
And as the tax code is the favorite haven for redistributing income, make it flat, no exemptions and everyone pays. If you have problems with the poor actually paying for their services, then give them a break and pro-rate it based on their degree of poverty, but everyone must pay for this government. It costs way too much to ‘help’ people by removing the burden from them. We all benefit so we all must pay.
That strange notion was what we fought a minor set of skirmishes over in 1776-1783.
Got in debt for our troubles, too. Took about 50 years to pay off. If we start TODAY our grandchildren might live in a debt-free Nation. But we have to MEAN IT in everything we do and stop shifting our burden to government.
ajacksonian on June 7, 2011 at 4:56 PM
Ill tell you what we got. Massively defunding liberal entitlements. Sure ain’t gonna win the votes, but we all know it’s inevitable. ObamaCare was the last in, so let’s make it the first out.
Chuck Schick on June 7, 2011 at 4:57 PM
I was with you all the way up to this point. If it’s pro-rated isn’t it, by definition, not flat? Haven’t you just said “no exemptions” and then carved one out?
dieudonne on June 7, 2011 at 5:00 PM
There is no such thing as ‘inevitable’ when it comes to politics, chuckles. Especially not with us being outnumbered and outgunned by liberals at darn near every turn.
Uncle Sams Nephew on June 7, 2011 at 5:05 PM
since you raised only the one objection in response may I take it that the other comments were accepted?
I’m fine with last in first out – but you still don’t say what would replace it. “Defund liberal entitlements” is a great banner to fly but it’s mute on what will replace the current system or how to handle the social disturbance of simply tearing things out root and branch. If you aren’t advocating for totally uprooting it then what reforms do you advocate? If you are advocating for totally uprooting it then it seems minimally responsible to at least discuss what will fill the void.
dieudonne on June 7, 2011 at 5:06 PM
If you can’t afford something, you want to close the void, not fill it. That’s the problem with entitlements- they make people feel entitled to money that is not theirs and is not there.
Chuck Schick on June 7, 2011 at 5:20 PM
I believe the 30% number to “drop” employer provided health care is low. I expect almost ALL of them to drop it. The 8% fine is CHEAPER than paying the benefit for the employee. This is the INTENT of the bill. The progressives want to go to a government provided single payer system.
Why do progressives want to control everything? It is just too exhausting. I just don’t get their mindset.
karenhasfreedom on June 7, 2011 at 5:50 PM
As always, excellently put.
They need to get the hell out of the way.
Just enforce the necessary rules of play & stop being in the biz of picking the winners & losers.
Badger40 on June 7, 2011 at 6:00 PM
+10
Badger40 on June 7, 2011 at 6:01 PM
Who’s gonna pay for this?
The Forgotten Man.
PackerBronco on June 7, 2011 at 6:19 PM
30 percent? That would be generous, optimistic and low-ball. many companies surveyed likely did the equivalent to telling the McKinsey, “proprietary” methods and all, what they wanted to hear. Company I work for nearly had a rebellion on its hands at the beginning of the year with the spike in contribution. Hourly guys are getting hammered. You can tell the management is just drooling for 2014 when they can drop it, shed the administrative staff, and blame the government.
Soon it won’t pay to work. You already feel like a fool paying your mortgage on time. And the administration just blathers on and on. An ill wind is blowing, and it originates in this horrendous president’s mouth.
curved space on June 7, 2011 at 6:23 PM
Quitter
Roy Rogers on June 7, 2011 at 6:52 PM
Sounds like you were asleep at the wheel in November 2010.
Roy Rogers on June 7, 2011 at 6:53 PM
I don’t know what the two of you think you are arguing about, but I can’t tell the difference between your positions.
Count to 10 on June 7, 2011 at 8:50 PM
Ahhhh… I love irony. Just opened a letter from BCBS telling me my insurance plan will soon be illegal and I will have to change it or drop it. My employees just lost their plans (had the meetings to tell them last week) and now my family has lost ours.
Bbbbbbbbbbbbbbbbbut I thought if we liked our plans, we could keep our plans!
Thanks for nothing, Zero.
stvnscott on June 7, 2011 at 9:27 PM
He said “let’s agree to disagree” and I refused.
Chuck Schick on June 7, 2011 at 9:31 PM
and things will come full circle again!
In the near future companies that really give a shit about their employees will offer medical coverage and good coverage. people will try like hell to be hired on and only the best will be taken and those companies will excel and the other companies will perish.
its not the END of the world , but it is the end of an era of I DONT CARE.
ColdWarrior57 on June 8, 2011 at 1:39 AM
that’s starting from teh position that free health-care is a right. It’s not. It’s not the gov’t's job to provide health care. We are supposed to have a “safety net” – something I think everyone agrees on – for people hit by hard circumstances to help them for a short period of time to get back on their feet.
Instead we have a welfare state – where we provide cradle-to-grave everything to those unwilling to work or better themselves.
Monkeytoe on June 8, 2011 at 8:08 AM
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