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.