CBO and small biz: Yeah, about keeping your health care plan if you like it

posted at 2:01 pm on February 7, 2013 by Mary Katharine Ham

This week the Congressional Budget Office put to rest for good the idea that if you like your health care plan, you can keep it:

“In 2022, by CBO and JCT’s estimate, 7 million fewer people will have employment-based health insurance as a result of the Affordable Care Act,” the CBO announced in its new budget outlook released on Tuesday. This is up from an estimate of 4 million last August, mostly reflecting the effects of tax changes.

In a July 2009 speech to the American Medical Association, Obama declared, “no matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.

Many of us saw this coming, but were told we were spreading myths by drawing logical conclusions about economic incentives, moral hazard, and possible unintended consequences. Now, of course, the White House claims they just meant no one in the federal government would actually forcefully take your health care away, never mind that they set up a situation in which losing your health care would become inevitable. Even that’s not true, though, as the Affordable Care Act does actively prohibit certain affordable health insurance options like mini-med plans and high-deductible catastrophic plans. “Take away” and “regulate out of existence” are functionally the same thing.

But let’s learn a bit about how these unintended consequences are coming to fruition. Remember, small businesses under 50 employees don’t have to offer health insurance under the new law, but many of them currently do. One would think that’s a a good thing we’d want to encourage if our goal is to increase the number of people in the country with health care coverage. And yet, as Obamacare’s mandates require plans that cover a long list of “Essential Health Benefits,” the costs for providing health insurance go up dramatically, as people are starting to notice. Among those who can least afford such increases are small business people.

In Florida, they want to do right by their employees and maintain health care benefits as a recruitment tool for good talent, but the choices are tough:

Companies now offering health insurance to a workforce of 50 or fewer employees can choose not to offer plans in 2014, when many provisions of the federal Patient Protection and Affordable Care Act take effect. If they don’t, workers may be able to buy coverage from a public insurance marketplace.

That decision is technical and riddled with potential penalties and taxes, local health care and insurance experts said Wednesday at a panel discussion for local human resource and business leaders.

Small-business owners worry how the new law will increase the amount they pay for plans they now offer, said John Urbanek, a senior sales and marketing vice president for the Florida Blue insurance carrier.

Some may choose not to hire any more workers to remain below the 50-employee mark. Many will discover that providing the health coverage they’ve been offered will not be affordable in the future. Right now, all over the nation, insurance actuaries are reporting Obamacare’s mandates to insurance companies, who are running to insurance commissions to request the rate increases they’ll need to absorb these new costs.

In the event that these small companies don’t provide insurance, employees are supposed to be able to buy insurance through a public “exchange,” which is supposed to operate like a Travelocity for insurance. The federal government has to build this exchange website and database to work for at least 25 states, and states going it on their own must be ready with their own versions by January 2014 (open enrollment is actually supposed to begin October 2013). Many think this is, frankly, impossible. What happens if those dumped by the current employee plans Obama promised they wouldn’t lose have no exchange to go into on Jan. 1, 2014?

Front-page photo courtesy of takacsi75 on Flickr Creative Commons.


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