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The Verde Independent | Cottonwood, Arizona

home : opinions : commentary May 24, 2016

7/7/2012 1:11:00 PM
Guest Commentary: The uncertain future of America’s employer healthcare coverage
Sally Pipes

The average family’s health benefits now cost more than $20,000, according to a new report from Milliman, a consultancy. American workers pick up about $8,500 of that tab, and their employers cover the rest.

President Obama’s healthcare law may unwittingly offer companies some relief from that obligation -- by encouraging them to discontinue offering health insurance. If employers take the bait, then Americans accustomed to getting coverage through work may have to find it on their own. A new House Ways and Means Committee report estimates that the 100 biggest American firms could save nearly half a trillion dollars over the next decade by dropping health coverage for their employees and foisting them onto public insurance exchanges, which are set to become operational in 2014.

The Committee surveyed 71 Fortune 100 companies and found that they spent $5,197 on health insurance per employee in 2011, on average. The cost of insuring an employee’s entire family was, of course, even higher. By the time the insurance exchanges open, the average worker’s insurance will cost his employer $6,500.

These estimates may be low. The cost of an employer-based insurance plan has increased by 112 percent over the past decade. And 84 percent of employers expect healthcare costs to increase at rates greater than those they’ve experienced over the past five years. Reasons for the increases include Obamacare’s provision that insurers keep children on their parents’ plans until age 26, the ending of price discrimination for patients with pre-existing conditions, and mandated coverage of free preventive care.

Employer-provided coverage is already becoming rarer. A recent study from the Employee Benefit Research Institute found that the number of private-sector employers offering health benefits to their workers has steadily decreased. In 2010, about 47 percent of wage and salary workers reported that they worked for employers that didn’t furnish health benefits. Another 15 percent weren’t eligible for those available.

Obamacare aims to change that by mandating that all employers with more than 50 workers provide insurance coverage. But it only fines them $2,000 per employee, with certain exceptions, if they don’t.

So the cost of insuring an employee in 2014 will be more than triple the penalty for not doing so. That gives employers an enormous financial incentive to scrap coverage.

In 2014 alone, the Fortune 100 companies could save $28.6 billion by dropping their workers onto the exchanges, according to the Ways and Means Committee report. By 2023, the savings could collectively reach $422 billion. That’s good news for the companies -- but not for their formerly insured workers. An employee forced onto an exchange will likely see a 79- to 125-percent increase in his premiums, according to an analysis by Lockton, a consulting firm.

The problems don’t end there. If American businesses leave the government to figure out how to cover their workers, then the already inordinate costs of Obamacare could skyrocket.

According to the Congressional Budget Office (CBO), Obamacare is set to spend $450 billion between 2014 and 2019 on subsidies for folks with incomes between 133 percent and 250 percent of the federal poverty line -- or between about $30,000 and $46,000 for a family of four.

But those projections depend on employers continuing to offer coverage. If they don’t, the cost of the subsidies could more than triple, to $1.4 trillion, according to former CBO Director Douglas Holtz-Eakin.

Obamacare could’ve headed off this crisis by making insurance more affordable. But its many mandates do just the opposite. For instance, the law limits the availability of high-deductible insurance plans, capping annual deductibles at $2,000 for individuals and $4,000 for families. Many policies featuring high deductibles -- and low premiums -- will be driven off the market by these rules.

RAND Corporation researchers found that expanding plans like these to 50 percent of the employer market -- from their current 13-percent share -- could reduce healthcare costs by $57 billion each year.

Obamacare all but guarantees that companies won’t be able to take advantage of those potential savings. President Obama promised Americans that they’d be able to keep their coverage under his reform plan. Those with employer-based health insurance may soon find that’s a promise he won’t keep.

Sally C. Pipes is president, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is “The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare” (Regnery 2012).

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Reader Comments

Posted: Friday, July 13, 2012
Article comment by: Timothy Duncan

I'm a vet too. The VA priority is and has been for awhile now the vets returning/returned from Middle East service which I understand given the numbers of those vets with psychological and physical injury. If you are an older vet like me who had need to see a VA dermatologist to have precancerous growths cut-off/frozen-off and biopsied, good luck getting an appointment for a long time. I know vets who couldn't wait for a VA appointment to see a specialist in five months and went to private provider and paid out of pocket. On the fixed income of many vets not yet Medicare age with little savings one must decide to risk putting-off a medical condition that could become serious or buying enough groceries and keeping current with their utility bills. Most vets do not qualify for no copay VA care. I've never been able to get an answer why the VA pays less for many prescriptions from drug manufacturers than Medicare. Are not both healthcare providers a part of the federal government? Thank you. Semper Fi.

Posted: Thursday, July 12, 2012
Article comment by: John A. Bond

Any desire for "profit" [love of material wealth or Mammon] is evil when it requires the exploitation of others and/or the destruction of the environment in pursuit of that "profit".

We all live on this planet together and unless we stop exploiting the planet's resources in pursuit of profit to satisfy greed, we are doomed to become like the dinosaurs extinct.

Only this time, unlike the dinosaurs it will be a fate of our own creation.

Posted: Thursday, July 12, 2012
Article comment by: stop kicking can down the road

Thank goodness I get my ten minutes a year with a MD at Prescott VA for my medical care. Depending on what kind of a vet you are and if you have outside insurance, healthcare varies widely for vets. I had to be hospitalized for three days back in 2009 and my Prescott VA co-pays amounted to $1470. Yes that's a lot less than what a private hospital would have charged me if I was uninsured, but its still a lot of money for a low wage worker. My employer does not presently provide insurance. No way can I afford private insurance (I've tried several insurers and for me it starts at $750 a month) with or without my preexisting medical condition. My optometry, dental needs must be paid out of pocket. One things for sure. We cannot continue with the cost of medical care and all the uninsured we have now. The kick the can down the road, survival of the fittest/economically solvent get theirs and the unfit/poor must beg and bankrupt the system is a no-go no matter what the just say no party says. Find other ways to reduce spending and raise revenue. Heathcare is a human priority for all citizens.

Posted: Thursday, July 12, 2012
Article comment by: John A. Bond

@ Peter is wrong:

Please, stop with the neoconservative talking points. They are not only untrue, they are extremely tiresome, too.

Posted: Thursday, July 12, 2012
Article comment by: the rest of the story...

is unwritten...

profit is not evil... but what it does to some folks is.

it makes them write letters making claims about what others believe...

how about we are all at least a little bit right and we get to the business of getting along and getting things done rather than obstructing at every turn?

Posted: Thursday, July 12, 2012
Article comment by: John A. Bond

I agree that those without access to the internet are unaware of all of the responses to this "article".

I also, agree that this is part of a corporate [fascist] effort to influence the readers of such corporate entities like the VI, into a belief that universal healthcare is a bad idea for America.

Of course, this is driven by the greedy, for profit corporate healthcare insurance industry that works hand in glove with corporate "media" entities like the VI to promote an acceptance of for profit healthcare insurance that is in reality destructive to the well being of the citizens.

I also think that such articles are part of the overall propaganda machine of the MIC dedicated to the transformation of our constitutional democracy into a corporate [fascist] one.

Posted: Thursday, July 12, 2012
Article comment by: Peter is wrong -- this is the rest of the story

Peter of Yavapai couldn't be more wrong. His two proferred reasons why healthcare is increasingly unaffordable are amazingly out of touch with reality.

First, like many liberals, Peter is ignorant about the true role of profit in our free market capitalistic system.

Profit is earned by providing goods and services that free people willingly buy in a free market with choices.

Profit is good. But many liberals, including the president, think profit is evil.

Second, the increase in healthcare demand is being addressed by a number of supplier alternatives. We no longer have to see medical doctors for checkups, prescriptions, and so forth. We can now see licensed nurse practitioners, physician assistants, and so on. This is one way the healthcare delivery system is evolving to meet increased demand.

The real reasons healthcare is becoming increasingly unaffordable has to do with the many expensive layers of ancillary services that get between you and your doctor.

These layers include trial lawyers (we all pay for doc's malpractice insurance that feeds a huge legal industry), the insurance industry (brokers, administrators, claims processors, etc.), and now, thanks to Obamacare a huge new federal bureaucracy required to implement "reform".

The huge new insatiable federal bureaucracy includes some 15,000 new IRS agents to audit your return for compliance. 150 new boards of unaccountable bureaucrats who will decide what medical services your doctor can and cannot provide. And of course the infamous department of HHS, a group that is already so wracked with fraud and incompetence that it cannot provide an accounting of how much of your money it spends every day. They just don't know.

All that really makes it more affordable doesn't it?

Then there's how we are encouraged to use health insurance for everyday health care expenses. Insurance is supposed to cover catastrophic losses. Imagine what your car insurance would cost if you used it for oil changes and air filters. And then you had to pay for everyone else who the government says can't afford it.

This is tantamount to what's happening to health care.

For true reform we've got to get all these layers that feed parasitically off the healthcare system out of the way.

My health insurance went up 40% since 2010, directly as a result of Obamacare.

So I switched to a high deductible plan that saves me over $10,000 a year.

Now I find out Obamacare will outlaw such high deductible plans beginning in 2014.

Gee thanks Obamacare!

Posted: Wednesday, July 11, 2012
Article comment by: peter and others...

i am afraid addressing Ms. Pipes directly will do you no good.. .thus the concern over having these boilerplate imported my turn articles/letters or whatever they are... this person will in all reality never read our paper... never see the responses she provokes and will never care to...

she is part of a machine that produces paid opinions to suit the desires of those paying.

most likely placed here in order to gin up a healthy string of replies that nobody reading the actual paper will see.

this may be one time the messenger should be considered more than the message.

Posted: Wednesday, July 11, 2012
Article comment by: Peter, Yavapai County

Ms. Pipes, the MAIN reasons for the breathtaking cost increases in health care are:
1. The profit motive
2. The dramatic increase in demand for health care from the "baby boom" generation who are beginning to move onto taxpayer subsidized Medicare. In a capitalist system, businesses charge as much as they can for their products and services. When demand grows, good capitalists raise prices. That is what is happening. It has nothing to do with the new law which kicks in a year and a half from now.

Mr. Obama is simply attempting to prevent the rest of us from being priced out of the health care market as spending on Medicare balloons.

Posted: Tuesday, July 10, 2012
Article comment by: please understand 2 cents...

the focus was not on actual area folks voicing their thoughts... but rather on these imported conservative think tank boilerplate "letters"- they are not in fact a true representation of the area. if you break down the comments they seem to break pretty close to 50/50 liberal/conservative... depending on the topic etc... if we look at the recent list of "my turn" bits you have the last 2 conservatank letters, then one by john kyl etc... it just seems to break fairly hard to the right... maybe not.. but please feel free to prove the idea wrong.

perhaps there will be a 'my turn' from a non conservative in the next paper... and prove the idea wrong... please... prove it wrong.

Posted: Tuesday, July 10, 2012
Article comment by: two cents

I have to applaud this newspaper for giving the readers a forum in which they can express their opinions. Whether the opinions are educated or correct they are showing a cross-section of peoples feelings and thoughts on a particular subject. This paper and online forum is a true example of free speech and we should all be thankful for the editors that are allowing us to air or concerns and grievances. This is a true example of what America is and should be and I thankyou Verde Independent for allowing us a voice in this difficult time in our history. just my two cent for what its worth

Posted: Monday, July 9, 2012
Article comment by: can we get an answer as to why we are...

being bombarded with these kinds of "my turn" farce articles/opinions?

is the paper short on verbage and needing to fill page space?

do you get paid to run things that are basically advertisements for whatever these conservative think tanks are?

are you attempting to inspire non-conservatives into action or just placate the conservative base?

i get it that the news paper world is changing and transitioning to the non hardcopy model... but the sad part is that the folks getting just the paper and not reading these comments and counterpoints are just happy to carry on thinking that they got the 'whole story' when in fact they are only getting the version on the paper page.

institution of a tit for tat balanced representation model does not seem to be too much to ask for... or maybe it is?

unfortunate really.

Posted: Monday, July 9, 2012
Article comment by: nutso fasst

I wonder how many who opine so knowingly have actually read the Supreme Court decision regarding the PPACA. Very instructive look at what was in dispute and how the different justices disagreed. Would be great for student discussion in a civics or government class.


Posted: Monday, July 9, 2012
Article comment by: Slater Slater

Obama care is going to be the least of our problems.

Posted: Monday, July 9, 2012
Article comment by: Your article just proves why a government offered option is needed under this new law.

Couldn't of said it better myself!

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