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Critical Condition

NRO’s health-care blog.


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Losing Your Coverage under Obamacare

The White House is in apoplexy over a survey released two weeks ago by McKinsey & Company and has done everything it can to discredit the detailed survey of 1,300 employers, which showed a significant percentage of companies will drop health insurance after Obamacare kicks in in 2014.

McKinsey met the criticism with the facts. It released the survey questions, methodology, and data, putting to rest questions about the objectivity. The survey was paid for by McKinsey and not any of its clients; it was administered by an internationally-recognized survey firm; the survey’s descriptions were largely fact-based and generic in nature; and it surveyed a large, representative sample of the nation’s employers.

Obamacare supporters are desperately trying to convince us that employers will be more, not less, likely to offer health insurance under the new health-overhaul law. Case in point: A new study by Urban Institute researchers released on Tuesday which concludes that small employers will be more likely to offer health insurance as a result of the health law.

These conclusions defy evidence, trends, and common sense. Small business owners across the country — and all employers — are considering paying the $2,000 fine for not providing health insurance rather than up to $10,000 for federally-prescribed health insurance for each worker.

The McKinsey survey found that 30 percent of employers overall will definitely or probably stop offering health insurance to their workers. However, among employers with a high awareness of the health-reform law, the share increases to more than 50 percent. I conclude this will mean as many as 78 million workers and their families will lose the health insurance they now get at work. Many of them will be forced into the government-run health-insurance exchanges.

In a study last year, Douglas Holtz-Eakin, a former director of the Congressional Budget Office, estimated that the CBO underestimated the law’s impact on job-based health insurance. He says that the incentives in the law will drive 35 million more workers out of employer plans and into subsidized coverage, and that this would add about $1 trillion to the total cost of the health law over the next decade. McKinsey’s survey implies that the cost to taxpayers could be significantly more.

Other facts to note:

The share of Americans with employer-sponsored insurance dropped from 69 percent in 1999–2000 to 61 percent in 2008–2009. This is part of a larger trend which Obamacare will accelerate.

A PriceWaterhouse Coopers survey of employers found that nearly half of all employers “indicated they were likely to change subsidies for employee medical coverage” thanks to the law.

An Associated Press story from last fall included quotes from a Deloitte consultant saying that “I don’t know if the intent was to find an exit strategy for providing benefits, but the bill as written provides the mechanism” and from the head of the American Benefits Council claiming that the law “could begin to dismantle the employer-based system.”

Former Tennessee Governor Phil Bredesen — a Democrat — in an op-ed said that Tennessee could drop coverage for its state employees, pay the $2,000 per employee penalty to the federal government, give their workers cash raises to compensate for the loss in health benefits, and still come out at least $146 million per year ahead.

Democrats didn’t face the facts about the damage that Obamacare would do before the legislation was passed, and they are refusing to accept the reality of its consequences now.

New on Critical Condition. . .


COMMENTS   9

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   06/22/11 14:59

Once companies do drop health insurance, I'm sure the Obama administration is poised to say, "**WE** didn't change your coverage, it's your mean, nasty employer that did it."

While mainstream Democrats may have the blinders on about Obamacare, this is precisely the situation the Administration wants.

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   06/22/11 15:45

@ECWONK
You are 100% correct. This is a plan to fail so that they can go to a 100% gov't controlled system for health care. I've read that many times and heard videos as well where its a multi step process.

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Sterling B
   06/22/11 15:07

Unfortunately, I am all too aware of the reality of the consequences of this legislation. The company I work for employs 3,000+ employees and will currently spend more than $2,000 per employee for healthcare coverage. The most likely scenario is that they will drop our company sponsored plan and pay the penalty; however, it is unlikely that the employees will receive any increased pay because of the downturn in our industry related to gas prices. If I listen closely, I can actually hear my coworkers becoming poorer by the second.

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Wayne
   06/22/11 16:30

This is all part of the plan for the feds to completely take over the healthcare industry. Why else would would fine someone 20% of what the cost is. Stupid people will fully believe its the corporations fault when they lose their plans. Obama and his administration are the sneakiest people since Pearl Harbor.

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mnopkt
   06/22/11 16:47

Paraphrasing Einstein:

Conservative intelligence is finite, liberal stupidity is boundless.

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   06/22/11 17:11

In a conversation with then Secretary of State of Ohio Sherrod Brown during the "Hillary-Care" debate," I stated that there were 3 reasons why such a system couldn't work:

1. It will cost WAY more than estimates indicate.
2. It will drive millions of patients to enroll in HMO's.
3. There aren't enough HMO's to handle the new load.

Fast forward to ObamaCare, which also won't work:

1. It will cost WAY more than estimates indicate (especially Democrat estimates.)
2. It will drive millions of (new) patients to enroll in HMO's.
3. There aren't enough HMO's to handle the new load.

Things don't change much in 20 or 30 years, do they?

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JB in MS
   06/22/11 17:24

This whole scenario was such a no-brainer from the beginning. Sterling B. is absolutely correct about a meaningless "fine" which is a fraction of the cost of the original benefit, the employees' insurance coverage.

Mandatory auto insurance laws have been an example of the same thing for years, a potential fine of maybe $100 or so, depending on the state involved,(and then, only if you're caught) vs. buying "mandatory" insurance coverage that might have cost the driver $1500 per year or more.

Anyone that's ever been involved, or had a family member involved in a wreck with an uninsured motorist, please raise your hand. Of course companies, like drivers, will often choose the cheaper option!

And now we hear that even a higher percentage of companies, a portion of which will be those that may continue to offer employee health benefits, will likely cease to offer dependent coverage. What a brilliantly executed piece of legislation Obysmalcare is turning out to be!

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Doug Foote
   06/22/11 20:23

The only solution to this mess is to repeal it and not bother trying to "fix it".
I've heard it said that you can't fix stupid.
The problem with our health care system is that we as a nation have come accustomed to someone else paying the bill.
Unfortunately when someone else is paying the bill we don't really have a say in what will be paid for.
The solution is removing the government from the process altogether.
As an individual I should be allowed to purchase what ever coverage I want and not be told that I must have coverage for things I will never use (maternity care is one those mandated things).
What ia being called "health insurance" is actually "prepaid" health care. Very expensive and unsustainable.
High deductable insurance plans with HSAs have worked for me (I have one). The money is mine that I put into it, and I fund most of my healthcare through it.
The sad fact is that the Patient Protection and Affordible Care Act outlaws HSAs when fully implemented.
Again, the real answer is to repealing this monstrosity, not fixing it at the edges.

Doug
External Link 

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   06/23/11 10:30

@ Doug Foote

You are correct on all counts. However, "Health Care Reform" was never about insurance or medical treatment. It is only about increasing power and dependency, which it does masterfully.

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