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Employers are going to stop providing health insurance



Published: Wed, July 27, 2011 @ 12:00 a.m.

By John Barrasso

McClatchy-Tribune

CASPER, Wyo

Most American workers value their employer-provided health insurance. It gives them the security of knowing they can get the care they need, from the doctor they want, at a price they can afford.

All that will change drastically if the president’s health care law remains on the books. That’s not just a warning from a conser- vative Republican — the administration’s own chief actuary of Medicare estimated that more than 14 million people would lose their employer coverage over the next eight years.

Even some of the administration’s most ardent supporters are starting to complain. The Service Employees International Union (SEIU) is on record as saying it would be “financially impossible” to follow this law.

In a study co-authored with my colleague, Sen. Tom Coburn, R-Okla., we reported the disturbing fact that more than half of all employers could have to stop offering employee health benefits altogether by 2013.

Drop outs

A June study by McKinsey and Company concluded that 30 percent of employers would definitely cease offering employee benefits altogether by 2014. That same study showed that among those employers who know how the law will affect them, as many as 50 percent could drop out.

The Obama administration already has handed out waivers exempting more than 3 million Americans from the law’s mandates. About half have gone to people who get their health insurance through unions like the SEIU.

If the terms of this onerous law now are “financially impossible” to meet for unions, why did they lobby for it in the first place? And, more important, why can’t all Americans get waivers, too?

The answer to both these questions is that the new health care law is designed to ultimately end employer provided coverage altogether.

Under the law, businesses are permitted to drop out of paying for employer-provided coverage so long as they pay a fine of $2,000 per employee. This number is far smaller than the $15,000 it costs businesses to provide family health benefits to each of their employees. Small businesses face an even clearer incentive to drop coverage for their employees. They are not required to pay this fine for the first 50 workers who lose coverage.

And where are those workers supposed to go? The new health care law has set up health care “exchanges” for them to enter. These “exchanges” are shorthand for insurance markets where as much as 80 percent of the cost of a family’s insurance could be borne by taxpayers.

Under these circumstances, the natural response is for businesses to drop coverage for their employees altogether and simply offer them less expensive cash benefits. Meanwhile, the employees will have to replace the coverage they like with a plan Washington mandates.

The really bad news for taxpayers is that the annual cost of providing these huge subsidies — about $900 billion — is more than nine times what the White House is willing to admit.

‘Deficit neutral’

This is because the estimates Washington uses to claim this law is “deficit neutral” assume that no employers will drop coverage at all, even though it is clearly in their financial interest to do so.

The facts are clear. The health care law takes away the coverage that Americans have and will drive America further into debt.

Americans want high-quality, affordable health care coverage. The president’s health care law doesn’t come close to achieving that goal.

Sen. John Barrasso is a second-term Republican from Wyoming and one of a few physicians serving in Congress. An orthopedic surgeon, he received his medical degree from Georgetown University. Distributed by McClatchy-Tribune.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Comments

1hiker27(18 comments)posted 3 years, 1 month ago

I have a small manufacturing business with about 40 employees. Always I have provided a good benefit package to attract and retain quality employees. The business' that opt out and pay the $2000 fine may not be able to compete in the market place with the businesses that attract better people. The best assets a company has is the workers. We must do all we reasonably can to enable our fellow man to be their best and still maintain a competitive edge

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2jnail(1 comment)posted 3 years, 1 month ago

Senator, with all due respect your staff did you a real disservice by not doing their homework before you published Watch for dramatic declines in employer-provided health insurance based on old, discredited news and McKinsey's own walkback of it.

The McKinsey study that “points to a radical restructuring of employer-sponsored health benefits” that started this thread made the bold prediction that 30% or more of employers would drop their ESI and that from 50 to 100 Million people would be dumped into the exchanges.

When challenged on their findings McKinsey, after 2 weeks and a letter from the Senate Finance Committee released their 29 pages of questions and methodologies and included this statement:

The survey …”was not intended as a predictive economic analysis of the impact of the Affordable Care Act.” . . . [T]he survey was more of a point-in-time reading of employer opinion. “As noted, the survey only captured current attitudes,”
Other Research

The survey’s headline grabbing results are a huge divergence from every other study done by CBO, SHADAC, Robert Wood Johnson Foundation, Avalere, Booz Allen, The Urban Institute, Mercer , Rand and others that showed just the opposite.

Three recent surveys done by benefits professionals who are in the trenches with clients in the mid-market everyday are also starkly at odds with the McKinsey study.

McGraw Wentworth, the largest independent benefits broker in MI and 8th largest independent in the nation, (500+ employers surveyed)
Corporate Synergies (156 financial execs interviewed) , a large NJ/Philadelphia broker, the third largest independent benefits consulting firm in the nation
United Benefit Advisors (12,000+ employers surveyed), an affiliate group of 140 mid market benefits brokers and the 5th largest benefit advisory group in the US.
They all reported little inclination by employers to drop coverage due to the law. This is also in keeping with the International Foundation of Employee Benefit Plans (IFEBP) found with <1% of employers planning to drop coverage.

Finally remember that in MA 5 years after Romneycare was enacted 76% of employers now offer coverage vs. 70% before and that is with no subsidies, small business tax credits and lower fines than PPACA has.

Clearly time will tell what really will occur but in trying to read the tea leaves work done by folks who work daily with the employers who will make these decisions trumps any academic work by any consulting firm of any type and should be used as the basis of any analysis not simply a study that discredits a law that you and your Republican colleagues don't like.

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