Will employers drop health coverage in order to save $422 billion?

By Catholic Online (NEWS CONSORTIUM)
5/3/2012
Catholic Online (www.catholic.org)

Many consider implications of publicly-subsidized health insurance

Some looking towards the future consider the not-faraway year of 2014 when tens of millions of Americans become eligible for publicly-subsidized health insurance. Will the American workforce continue to pay for workers' health plans? Or will they take the more economic route and let the government fill that role?

Companies currently offer health benefits to stay competitive. A robust health plan can woo potential employees, in particular the 122 million Americans with preexisting conditions who insurers can deny on the individual market.

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LOS ANGELES, CA (Catholic Online) - According to a new report from the House Ways and Means Committee, it's estimated that America's 100 largest companies could save a collective $422 billion over ten years.

According to the report, if workers use public subsidies at a higher rate than expected, the cost of "Obamacare" could skyrocket. What will the major employers do then?

It's questioned if whether large companies will dump employees in record numbers.

Companies currently offer health benefits to stay competitive. A robust health plan can woo potential employees, in particular the 122 million Americans with preexisting conditions who insurers can deny on the individual market.

Employers get to pay for health insurance with pre-tax dollars, making a dollar of health-care benefits work more than a dollar of wages, which is a huge financial benefit. In addition, if workers are healthier, they'll be more productive with fewer sick days.

The main reason not to offer insurance is the cost. The average employer-based insurance plan costs more than $15,000 a year, and has increased more than a whopping 112 percent over the past 10 years.

Rising health-care costs are the usual excuses for employee dismissal. The argument is: Why bother paying $15,000 for an insurance policy when the penalty for not doing so is a paltry $2,000?

The insurance market in the year 2014 will look a lot different than what we have right now. The government will subsidize insurance for anyone earning less than 400 percent of the Federal Poverty Line and insurers will have to accept all customers. The individual market, in short, will become a much more hospitable place.

The best experience we have suggests that employers won't drop coverage. That comes from Massachusetts' experience under "Romneycare," which, like the federal law, provided subsidized insurance for low-income Americans. Under this plan, employers have continued to offer coverage at the same level they did prior to the reform law.

The benefits of offering insurance, such as the competitive, financial and wellness aspects don't disappear in 2014. Companies can still get more "bang for their buck" offering compensation as health insurance rather than wages.

The government subsidies, meanwhile, are less generous: An employee who gets tossed into the exchange can expect to pay 79 to 125 percent more in premiums. Therefore, that means employers will still have a competitive advantage from offering insurance rather than sending workers to publicly subsidized coverage.

Right now, employers do not face any penalty for not offering coverage: There's no $2,000 fine from the government, as there will be in 2014. But the vast majority of them still do, even as costs keep rising, mostly because of other benefits they reap.

� 2012, Distributed by NEWS CONSORTIUM.

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Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
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Keywords: Health insurance, employers, Obamacare, premiums

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1 - 6 of 6 Comments

techwreck
1 year ago
Rob, I don't understand your reasoning. A single payer system let's government bureaucrats make all of the choices and we have to live with them. Result?
death panels like England or extended waits for care (de facto death panels) in Canada. ......... On the other hand, the problem in the U.S. is that I can go to the doctor any time I want with no idea of what that visit actually costs and no incentive to skip visits for minor complaints. That adds up to wasteful spending. If insurers (or the government for Medicare and Medicaid) gave me a charge card, required the docs to post their prices, and let me keep some of the savings at the end of the year of my charges were below average, I'd pay attention to what I was spending. ......... I'd be glad to have the card for a major illness, but I'd be careful for my day to day health care expenses. The issue with health care is - Who gets to decide? In a free country, the people should decide about heir own care! But, the evidence is that the government politicians and bureaucrats don't want to give it to us. They want the power!
Rob
1 year ago
I sat through a tax conference the last two days where both the federal and state budgets were discussed at length. One thing is for certain, the burden of healthcare is not going anywhere and it just keeps rising. Medicaid is eating up state coffers and Medicare is doing the same at the federal level. What is interesting about these trends is that we keep avoiding the discussion we probably need to have. Is our system morally defensible? Is it right to deny people good quality healthcare merely because of economics? We have to stop pretending that our system is working for the country. It's been a drag on employers for decades, and for all the money spent, our outcomes are pretty terrible when compared to the rest of the world who spends far less. I'm not suggesting we adopt these other systems, but maybe a single payer system for preventitive care might be the answer? The HCA is not the answer, does some good, but mostly does harm. But as people who are pro-life, we should be serious about seeking solutions to the healthcare crisis in this country. The status quo isn't working. Repeal of the HCA is not going to fix this system.
DLL
1 year ago
My argument is that health is socialised medicine. No individual could afford to pay for the extreme costs of their healthcare without insurance. If someone is healthy all of their lives than they help to pay for those who are less fortunate than themselves ideally. Unfortunately the insurance company has become an incredible racket and in cahoots with the federal government they will bleed the entire public dry,do to their deliberately corruptive and evasive practices. When health insurance becomes mandatory for everyone the options will become poorer,as the insurance product cheapens all costs,but at ever increasing costs to consumers that are given less for more,as all costs get passed on,through higher and higher premiums. The government will probably place a tax on premiums in the future so that they can have lavish parties at the White House while claiming that the burden of healthcare is one where everyone must be held accountable. Of coarse employers will dump employer sponsored healthcare as they are already doing it now by cutting back the forty hours worked per week of their employees so that can't qualify for any coverage at all,or they can get coverage at an increased cost for less hours worked per week say 36 or 24. Of coarse the deductibles on the policies are ever increasing each year as are the co pays to go to the emergency room. In the end it will,be cheaper to pay the penalty for no health insurance and to stay home and simply die than to go to the emergency room and get fleeced to death financially,or worse yet to a for profit nursing home for the elderly after their initial hospitalisation.
techwreck
1 year ago
David, since you criticized the health insurance industry with no supporting information, I'll contend that it is actually government that is guilty of incomperence and I'll back it up! The same goverment that is letting Social Security and Medicare go broke has done it again! ... 1. The government is actually the one that has established "death panels" that decide which treatments will not be paid for based on age and other factors, condemning some patients to death. ... 2. Government design of Obamacare will run massive deficits that must be made up by the taxpayers, clear evidence of the incompetence of the Obama administration. ... 3. I don't know what "socialize risk" means, but Obamacare allows patients to buy health insurance after they are diagnosed with an illness at the same premium as other policy holders, guaranteeing that the rest of us will pay higher premiums. These "free-riders" will pay much less than the rest of us for the same care, guaranteeing an increase in premiums from a program that was supposed to "lower the cost of health care". Obamacare looks like another government disaster, if it is not unconstitutional, and I rest my case!
David Carlon
1 year ago
Can anyone provide a convincing argument for the parasitic for-profit medical insurance industry? Why do we need private industry middle-man death panels? Why do we need to provide a captive market for an industry of incompetents? Why does our government continue to socialize risk and guarantee profits to a dinosaur of a Model-T industry?
techwreck
1 year ago
Independent sources (not representing either business or the Obama administration) have commented that the structure of the Obamacare program will allow employers to save money by just paying the penalty and allowing the government to provide health insurance. A portion of the savings will probably be given to the employees as an incentive. ... Employees should be able to buy better health insurance at lower cost from the government because the taxpayers (that's all of us) are picking up part of the cost, (partially with dollars borrowed from China.) ... It sounds like Obamacare is just another government give away entitlement program that will hasten the bankruptcy of the U.S. if the Supreme Court doesn't rule against it or the voters don't send Obama back to Chicago.

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