GOP Report: Employers Would Save Money by Dropping Coverage

The U.S.'s largest companies could save billions of dollars by dropping employee benefits and shifting workers into the federal health reform law's health insurance exchanges, even after paying a penalty for not providing coverage, according to a report released Tuesday by Republicans on the House Ways and Means Committee, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 5/1).

The findings echo concerns from a similar report released last week by Republicans on the House Energy and Commerce Committee, which found that certain companies on President Obama's Council on Jobs and Competitiveness expect the overhaul to increase their health care costs and could provide incentive for them to drop coverage for their employees (California Healthline, 4/27).

Report Details

The new report -- titled "Broken Promise: Why ObamaCare Will Force Americans To Lose the Health Care Coverage They Have and Like" -- is based on a survey of 71 Fortune 100 companies (House/McCarthy, National Journal, 5/1).

The overhaul requires businesses with more than 50 employees to provide health coverage or pay a $2,000 fine for each worker who purchases coverage on his or her own. However, the report found that the fines would be less costly than providing health benefits.

By comparing the companies' anticipated health care costs with the cost of paying the penalty, the report found that the companies would save $28.6 billion in 2014 if they dropped health coverage for their workers ("Healthwatch," The Hill, 5/1). Over a decade, the companies would save $422.4 billion, the report found.

Ways and Means Committee Chair Dave Camp (R-Mich.) said the report and previous studies suggest "there is a distinct financial incentive for employers to terminate health care coverage under" the overhaul (National Journal, 5/1).

Democrats Call Report 'Cynical'

Democrats on the Ways and Means Committee criticized the report, noting that it did not ask whether the companies intended to continue providing coverage, CQ HealthBeat reports (CQ HealthBeat, 5/1). They added that the report is "cynical" in its predictions, and pointed out that most large companies have voluntarily provided coverage for years.

Josh Drobnyk, a spokesperson for Rep. Sander Levin (D-Mich.), said, "According to the logic of this so-called report, businesses could have 'saved' even more money if they dropped employee coverage years ago, which is perfectly legal and carries no penalty" (Winfield Cunningham, Washington Times, 5/1).

Vashti Winterburg
What I found laughable was the title of the report that included: "...Why Obamacare Will Force Americans to Lose the Health Care Coverage They Have and Like." Whoever wrote that title is either an incredible cynic or the world's biggest rube. Nobody who has ever dealt with his insurance company "likes" their overpriced, defective-product insurance. And MIR TED: I would take the Medicare bureaucracy team over ANY health insurance company any time,any where. I'm guessing if push came to shove, you'd take Medicare for All if offered too.
Tim Colling
Here's a fun thought: Let's propose that everyone in the country be moved into the healthcare system that federal civil servants enjoy, with status and benefits equal to those enjoyed by the civil servants, at no cost to anyone except by raising income taxes enough to pay for it all. In other words, the same deal enjoyed by civil servants. That would go over like a lead balloon, wouldn't it? :)
Tim Colling
Is anyone surprised by this? It's been pretty obvious from the beginning that the whole point of of this governmental power-grab was to move everyone into a national, central, government-controlled single payer system. That's why I always call it the national healthcare takeover act, not obamacare or "ACA".
Frank Neuhauser
interesting theory...although it would follow directly from this logic that many more employers are not offering coverage under the present system where there are no penalties. it is just as likely or more likely that adding the additional incentive of the penalty to the current employer calculation will expand employment based coverage by reducing the marginal cost for those employers who don't currently offer employment based healt insurance.
Economic reality will hit home soon, cynical or not. State and Federal governments have seldom shown an ability to be productive and cost-effective. In part because many of the "problems" left to government are not solvable without heavy commitment from the intended affected groups. Also in part be-cause government is inherently lethargic and focused on mainly on sustaining itself and its supplicants. Tax whomever you want, but until a way is found to lower the costs of healthcare by increasing competition, backed by reasonable regulation, it is only a matter of how the costs are spread around to,ultimately, taxpayers. We already have a large amount of centrally planned healthcare, with folks like United Healthcare as captive brokers who will benefit significantly from ObamaCare. Add a huge govt. bureaucracy over the existing one, and cost-containment is not likely. Be careful what you wish for.

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