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Will employers drop health coverage in order to save $422 billion?
By Catholic Online (NEWS CONSORTIUM)
May 3rd, 2012
Catholic Online (www.catholic.org)
May 3rd, 2012
Catholic Online (www.catholic.org)
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?
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.