Employers Say Reform Law Will Increase Health Costs, GOP Report Finds

Certain companies on President Obama's jobs council expect the federal health reform law to increase their health care costs, which could lead them to drop coverage for their employees, according to a report released on Thursday by Republicans on the House Energy and Commerce Committee, the Wall Street Journal reports (Radnofsky, Wall Street Journal, 4/26).

Report Details

The report -- titled "Higher Costs, More Confusion, Less Coverage" -- compiles public and private statements on the health reform law from business leaders on the President's Council on Jobs and Competitiveness, a 27-member advisory panel established in January 2011 (Adams, CQ HealthBeat, 4/26).

According to the report, some companies anticipate their health care costs to increase because of higher taxes, fees and administrative burdens under the overhaul. They also voiced concerns that provisions requiring no-cost preventive care, the removal of lifetime coverage limits and coverage for dependents would create an incentive to drop employee-sponsored coverage because the health reform law's penalties would be less than the cost of insuring each worker, the report stated (Morgan, Reuters, 4/26).

For example, Southwest Airlines in 2010 said the overhaul would increase its costs by between $4.7 million and $9.4 million, according to the report (CQ HealthBeat, 4/26). In July 2011, benefits consultant Mercer told Southwest that the overhaul would force the company to pay an extra $414 million annually, or the company could drop employee-sponsored coverage and pay $111 million in penalties.

According to the report, the documents corroborate concerns that "the law will increase costs, make future planning for hiring and expansions difficult due to the uncertainty created by the law, and could ultimately lead to employers dropping health-insurance coverage for their employees."

Companies, Report Indicate Employers Will Not Drop Coverage

According to the Journal, several companies mentioned in the report -- including Southwest -- denied any plans to drop their health benefits.

The report states that "while no member of the council indicated that they were considering dropping their coverage at the current time, the temptation to drop coverage or provide a bare minimum level of coverage remains" (Wall Street Journal, 4/26).

Democrats Denounce 'Biased and Partisan' Report

House Democrats on Thursday accused Republicans of distorting the companies' statements to create a "fundamentally misleading" report about the health reform law, The Hill's "Healthwatch" reports.

In a letter to Republicans on the House committee, Reps. Diana DeGette (D-Colo.) and Henry Waxman (D-Calif.) said, "The biased and partisan approach that you have taken in today's report heightens our concerns about how the Committee is using its investigative powers."

House Democrats noted that about one-third of the 27 members of the jobs council did not respond to the GOP's inquiries for the report. Further, Democrats alleged that Republicans ignored reports by Intel, Kodak and other companies "that did not comport with the conclusion that you had reached even before opening the investigation" (Baker, "Healthwatch," The Hill, 4/26).

Theresa BrownGold
Yes, the thinking goes that businesses 50 and over already give benefits to full time employees as a way to attract talent. If they drop insurance altogether and pay the fine, it remains to be seen how competitive they will be. Offering a benefits package may just be the carrot they need for talent. An owner of a business with 2000 employees, 1000 of whom are part time, told me that it will be indeed cheaper to pay the fine for the 1000 employees. He said straight up that he wished the gov't would just tax everybody upfront according to their fair share and get the burden off the employer (and he was NOT voting for Obama.). I'm hoping that reform will start a much more honest dialog about how we delivery healthcare in the US? So many uninsured, under-insured, health savings accounts (i.e. cost shifting to consumers)...current system is crumbling
John Brown
Companies with over 50 full-time employees are required by law to provide the option of health insurance coverage for their employees. The ACA will provide these companies with the choice of providing health insurance benefits or eliminating the benefits and paying a fine. The fine is much lower than the cost of benefits. The ACA eliminates the requirement that companies with over 50 employees provide health care coverage.
Theresa BrownGold
If a large company will pay penalties under the healthcare reform law it means they rely heavily on part time workers. Why? Because it is a way to control expenses because part time workers do not get healthcare benefits. Now maybe these companies will demand that the responsibility for providing health insurance be lifted from them. And a system of real access to healthcare for all be can put in place. (maybe single-payer where people are taxed upfront according to their income.) A country of part time workers does not a strong country make. It has to stop. Let large businesses lead the way by demanding a change to this employer-based system. The free ride for very large businesses on the backs of part time workers is over. (Small businesses are exempt.) Time for large business to get on the right side of this issue and jump in with real solutions for getting access to healthcare for all without very large businesses being penalized. The part time worker gravy train should

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