A recent employer survey by McKinsey & Co. found that more than half of all American companies are likely to “dump” their workers into the government-run exchanges. If half of the 180 million workers who enjoy employer-provided care wind up in the exchanges, the annual cost of Obamacare would increase by $400 billion by 2021. If the other half eventually follows suit, and all American employees wind up in the exchanges — which we believe is a goal of Obamacare — then the annual cost of the exchanges would increase by more than $800 billion. Like Medicare in 1965, this would be more than nine times the original cost estimate of $93 billion each year ($893 billion vs. $93 billion).
This extraordinary additional cost is being ignored by the administration. Rather than honestly discussing the likely cost of these new benefits, and ensuring that they match our budget realities, the White House has tried to dodge the issue. When Health and Human Services Secretary Kathleen Sebelius recently appeared before a Senate subcommittee, one of us questioned her about the likely cost of the exchanges. Instead of tackling the question head-on, she called it “cynical.”
But it’s not cynical to think that employers will choose to improve their companies’ bottom lines while enabling their employees to take advantage of generous heath-care subsidies. In fact, Joel Ario, Sebelius’s own director of exchanges, recently said that if the exchanges work well, employers may well say, “I can now dump my people into the exchange and it would be good for them, good for me.”
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