Stanley Feld M.D.,FACP,MACE
McKinsey Quarterly has reported its survey concluding there will be a radical restructuring of employer-sponsored health benefits (ESI) as a result of President Obama’s following the 2010 passage of the Affordable Care Act.
Healthcare insurance rates have already skyrocketed as a result of anticipating the conditions of Obama care. President Obama has been powerless to do anything about the increases.
Thirty percent (30%) of companies providing ESI to their employees will drop healthcare insurance coverage once Obama care takes effect in 2014.
The survey included 1300 employers providing ESI across industries, geographies, and employer sizes. Other surveys have found that as we get closer to 2014, President Obama’s Healthcare Reform Act will provoke a much greater number of employers to drop employer sponsored healthcare insurance.
The penalty for not providing healthcare insurance coverage is much cheaper than providing healthcare coverage.
McKinsey’s survey suggests that when more employers become aware of the new economic and social incentives embedded in Obamacare the percentage of employers dropping ESI will come closer to 100%.
The Congressional Budget Office estimated that only 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to government subsidized-exchange policies (Public Option) in 2014.
- Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014.
- Many Human Resources officers and CFOs do not know the implications of Obama care.
- Among employers having a high understanding of President Obama’s Healthcare Reform Act more than 50% will stop offering employee healthcare benefit and more than 60% will make some kind of change.
- At least 30 percent of employers feel they would gain economically from dropping coverage and paying the penalty. They would even gain if they increase their employees’ salary or other benefits.
- The insurance coverage is in excess of $15,000 per year per employee. The government penalty is $2,000 per employee.
- The difference in cost will force employers to drop ESI and force employees into the Public Option. This was President Obama’s plan all along.
- The survey also showed that more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI.
- Sixty (60) percent of employees would expect an increase in compensation from their employers.
- Who are these rules in favor of? They are not in favor of the employee.
Health care reform fundamentally alters the social contract inherent in employer-sponsored medical benefits and how employees value health insurance as a form of compensation.
“Obamacare” guarantees the right to health insurance regardless of an individual’s medical status or ability to pay. In doing so, it minimizes the moral obligation employers may feel to cover the sickest employees, who would otherwise be denied coverage in today’s individual health insurance market.
The logical result is healthcare insurance premiums would increase for the individual and benefits would decrease to keep the premium cost down.
In 2014, people who are not offered affordable health insurance coverage by their employers will receive income-indexed premium and out-of-pocket cost-sharing subsidies from the government.
The highest subsidies will be offered to the lowest-income workers. It enables these low paid workers to obtain coverage they could not afford in today’s individual market.
The government will pay the subsidies for the increasing premiums in this Public Option. The government would then pass the increased premium cost on to the taxpayer on a means tested basis.
The next step is government’s complete control of the healthcare system using a single party payer system.
Employers will no longer be able to offer better healthcare insurance benefits to their highly compensated executives. Obamacare requirements will increase medical costs for companies. Companies will be forced to discontinue employee healthcare coverage. The penalty is set low to further encourage companies to discontinue coverage. President Obama’s goal is to have most people in the “Public Option” This will lead to government control of the healthcare system.
State insurance exchanges will be paid for by the states with a federal subsidy. These exchanges will offer individual and family policies of set benefit levels (bronze, silver, gold, and platinum) from a variety of insurance companies.
The effect on the federal deficit will be much greater than the original CBO’s estimate of 10 million people, or about 7 percent of employees, currently covered by ESI.
Seventy (70) million people will be added to the “Public Option”. This increase in numbers will add to the deficit. The result will mean higher taxes for the middle class.
President Obama wins his ideological goal. Consumers will have less control over their decision-making and choices. The healthcare insurance industry will gain more control over pricing and profit. President Obama will continue to outsource the administrative services to the healthcare insurance industry.
The losers will be consumers and physicians.