Pirate's Cove

Highlighting what we’ve known for quite some time

(Washington Times) Trying to build their case that President Obama’s health care law will destroy traditional employer-sponsored insurance, House Republicans released a study Tuesday showing that the largest companies could save billions by kicking workers off their current health plans and pushing them into government-subsidized exchanges.

In a dig at Mr. Obama, who promised that the law would allow people to keep their current coverage, the report found that companies could save $4,821 per worker if they chose to end coverage and instead pay a fine — leaving their employees with no recourse but to buy insurance on their own through the exchanges.

“It is clear to me that because of this law, Americans will not be able to keep the health care plan they have and like,” said Rep. Dave Camp of Michigan, chairman of the House Ways and Means Committee. He charged that the Affordable Care Act will make insurance so expensive that employers won’t be able to afford to offer it anymore.

Obamacare provides multiple incentives for companies to drop their offerings and push their employees to the Exchanges. It’s not a bug, it’s a feature. Of course, Democrats say this is bunk

Josh Drobnyk, spokesman for Rep. Sander M. Levin, the ranking Democrat on the committee, said official government scorekeepers had studied the issue and found that relatively few employers are likely to drop their coverage over the next few years.

Mr. Drobnyk said companies offer insurance as a way of enticing the best workers, and said that won’t change.

“According to the logic of this so-called report, businesses could have ‘saved’ even more money if they dropped employee health coverage years ago, which is perfectly legal and carries no penalty,” he said.

He’s partially right, some companies do offer health insurance to entice workers. But, in this century, offering health insurance, along with vision and dental (dental used to be the really big deal, for those of us old enough to remember), is simply considered part of the wages. Most companies, at least those with 50 or more employees, offer insurance. At least to full time employees. And there’s the rub.

I’ve offered this explanation many times within the blogs I post at, in comments, and in Real Life. But, let’s consider again: you are the owner of a company with over 50 employees. You offer health insurance. You’re spending anywhere from $8k-$12k a year per employee (the average costs across the board). You move your plans to a health savings account, which immediately lowers costs to $6k-$8k a year. But, Obamacare limits contributions to HSA, setting a cap at $2,500. Obamacare causes many other problems with HSAs, too.

But, you’re a good boss, and want to provide health insurance to your employees. You believe in social justice, spreading the wealth, and the “general good.” And, you’re generous in offering health insurance to your part time employees, though they would pay about 3 times what a full timer would pay. Hence, none of them get insurance through the company. Hey, you offered!

But, there’s a little problem: if just one employee gets insurance through the Exchange, you will be responsible for paying the fine, probably $2,000, for every single employee. You’re already paying roughly $350,000 a year to provide health insurance, just part of doing business. But, you’re really not keen on taking the chance that you will have to give the Central Government another $100,000 a year. Spreading the wealth only goes so far. So, you’re options are to a) take your chances or b) drop your insurance, perhaps offering $2k a year extra in earnings or a subsidy so your employees can get insurance on the Exchange, and simply paying the fine.

Companies won’t take the chance. They’ll drop their insurance. Which is what Obamacare wants, that way more and more people will be forced into the government exchange.