Who didn’t see this coming? According to Kaiser Health News, employers are increasingly looking at the benefits of getting out of the health-insurance delivery process. Fueling this interest are ObamaCare-related spikes in health-insurance premiums, plus the opportunity to fix costs and reduce vulnerabilities presented by employees who develop serious health issues:
Can corporations shift workers with high medical costs from the company health plan into online insurance exchanges created by the Affordable Care Act? Some employers are considering it, say benefits consultants.
“It’s all over the marketplace,” said Todd Yates, a managing partner at Hill, Chesson & Woody, a North Carolina benefits consulting firm. “Employers are inquiring about it and brokers and consultants are advocating for it.”
Patients with preexisting medical conditions like diabetes drive health spending. But those who undergo expensive procedures such as organ transplants are a burden to the company as well. Since most big corporations are self-insured, shifting even one high-cost member out of the company plan could save the employer hundreds of thousands of dollars a year—while increasing the cost of claims absorbed by the marketplace policy by a similar amount.
And the health law might not prohibit it, opening a door to potential erosion of employer-based coverage.
“Such an employer-dumping strategy can promote the interests of both employers and employees by shifting health care expenses on to the public at large,” wrote two University of Minnesota law professors in a 2011 paper that basically predicted the present interest.
One did not have to be UM law professors to see this coming. We have pointed out these perverse incentives in the employer mandate since before Democrats put the ACA up for a vote. Barack Obama and his supporters insisted that “if you like your plan, you can keep your plan,” based in large part on the assumption that businesses would simply eat the exploding costs of mandate health insurance.
That, however, ignores the efficiency process and cost-benefit analysis that any business with a survival instinct uses. If it’s cheaper to pay the fine and dump the coverage, the only incentive that employers have to do otherwise is strictly competitive. And that will only last as long as the competition doesn’t make the same move. Once the first few employers looking to gain a tactical advantage on costs make the decision to get rid of that overhead, everyone else will follow to negate that advantage — and to push those costs off onto the federal government. That will make a hash of the carefully managed cost analyses offered by ObamaCare supporters, and subsidy payments will explode far past the ability of revenues within the ACA to keep pace.
By the way, we should start seeing this phenomenon in just a few months. Even though the White House pushed the open-enrollment date for 2015 to mid-November to avoid having an ObamaCare shock just before the election, these businesses have to decide on whether to keep coverage as part of their budgeting process for the next year — and that will take place long before November 15th. Employees will start noticing that their employers aren’t holding their usual private-sector open enrollments on October 1st, even if employers wait to give them the bad news until November. That will not motivate voters to rush out and support Democrats, to say the least.
This report comes at an opportune moment. Sylvia Burwell will testify this morning at 9:30 at a Senate Health, Education, Labor and Pensions (HELP) Committee hearing to discuss her nomination to replace Kathleen Sebelius as HHS Secretary, and to answer some questions about ObamaCare:
Before the Senate confirms Sylvia Mathews Burwell to take the helm of the Health and Human Services (HHS) Department, lawmakers are sure to have tough questions for her.
On Thursday, when she appears before the Senate Health, Education, Labor and Pensions (HELP) Committee, Burwell will find out whether those questions will focus on the partisan controversies surrounding Obamacare or more substantive policy matters. She’s likely to get a taste of both. …
The failure of Oregon’s Obamacare marketplace — which cost the federal government more than $300 million — has piqued the interest of not just lawmakers but also nonpartisan investigators, including reportedly the FBI. Other states such as Massachusetts are also struggling to run their own marketplaces.
While lawmakers Thursday are sure to bring up Obamacare’s existing flaws, there are plenty of other questions for Burwell about the law’s continued implementation.
For one thing, lawmakers may ask if she’s prepared to oversee the ongoing construction of HealthCare.gov. Insurers on Capitol Hill this week reminded Congress that the back end of the website has yet to be finished.
In February, White House spokesman Jay Carney told reporters it would take “several months” to finish the back end portion of the website, which will automate the transfer of federal subsidies from the government to insurers.
The HELP committee doesn’t actually get a vote on Burwell’s confirmation. Her official confirmation hearing will take place with the Senate Finance Committee, and the new filibuster rules makes it all but certain that Burwell will win confirmation in the end. Republicans will get two public hearings in which to press for answers on ObamaCare failures and the dishonesty of administration claims and promises — and probably should demand some answers on the real impact of the employer mandate, too.