PDF “If you are among the hundreds of millions of Americans who already have health insurance through your job, … nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have.”
How much longer?
President Barack Obama used these words on September 9, 2009 before a joint session of Congress.
On other occasions the President has stated more bluntly, “If you have insurance you like then you will be able to keep that insurance. If you have a doctor that you like, you will be able to keep your doctor.”
Read my lips
I predict that within five years these words will be tacked up along side, “Read my lips! No new taxes!” as examples of presidential overstatements.
To be more precise, after the insurance exchanges are up and running, I predict that one of the big private employer plans, bowing to competitive pressures and other “economic realities”, will pull the plug on its employer sponsored health care plan. That will start a mass exodus that will topple the private employer sponsored market in a very short time.
Was the President naive?
The President’s words were more likely an audacious misstatement or misunderstanding. The statement presumes – incorrectly – that employees have the final say on keeping the health insurance – or the doctor – they like.
Even as the President was speaking, workers at SK Hand Tools in Chicago were on strike because their employer had unilaterally stopped paying for their employees’ health insurance. They may have liked their insurance. They may have liked their doctor. It really didn’t matter. Their employer did not want to pay for it anymore.
Why do I think employers will bail on health insurance? Le me rephrase that question. Why do I think private employers will bail on health insurance? After all, didn’t our politicians repeatedly reassure us that the employer sponsored health insurance was the “foundation” of our health care system?
The buzz
It is not this quote from a story in Time magazine
But now that regulations about existing employer-sponsored plans have been issued, it’s becoming clear that many of the 160 million Americans with job-based coverage will not, in fact, be able to keep what they currently have.
Much of this noise is consternation from some employers and conservatives that the PPACA restricts employers’ ability to raise costs or cut benefits to employees. Poor Karl Rove is beside himself about this.
Jonathan Cohn has the proper retort to this:
Insurance changes all the time. And it’s not usually for the better. In recent decades, as the cost of health care has skyrocketed, millions have become uninsured while additional millions have become under-insured. The point of health care reform is stop and, eventually, reverse this trend–to make sure everybody has access to an insurance policy, to make sure insurance policies actually provide adequate protection, and then to make sure coverage is affordable both for individuals and the country as a whole.
I am not concerned that plans won’t be “grandfathered”.
What are employers thinking?
The chief executive of UnitedHealth Group says he does not think the federal health reform law will force large employers to end their health insurance plans.
Stephen J. Hemsley, the company’s CEO and president, gave the forecast at the Sanford C. Bernstein investor conference, according to a report on the Dow Jones Newswires.
“We really don’t expect a significant movement…with respect to a broad exodus from commercial benefits into the exchange version,” Hemsley was quoted as saying.
Mr. Hemsley, it seems , is reacting to concerns about the small group market. Why is he couching his response in terms of the large group market?
New rules
Two things have changed that affect the framework for employer decisions.
The first is an employer mandate. Employers are weighing the cost of providing health care coverage to the alternative of paying the penalty. For most employers, especially smaller employers, that could be an easy decision.
The second factor is the existence of an alternative. The health insurance exchanges will give employers an alternative that did not exist before.
Large employers will be weighing additional factors.
Will health care reform reign in cost increases enough to offset some of the other additional costs that will flow to employers such as adding young adults to age 26 and the removal of certain benefit limits? One of those costs that employers will be watching will be the tax on drug and medical device manufacturers that will surely pass through to employers. If the net result is not a reduction in the medical benefit cost trend, the tower starts to tip.
Then there is the tax on Cadillac health care plans benefits. This may prompt the work force, especially the unionized workforce, to press for offsetting wage increases putting additional cost burdens on the employer. that tower tips a bit more.
It is easy to imagine that the cumulative effect of these cost pressure will prompt one large and especially vulnerable employer to pull the plug on its health care plan. It is also not hard to imagine not just a race to the bottom, but a free fall.
It is why single payer advocates need to keep the heat on legislators. When the “foundation” crumbles and the tower tips over, Americans will be screaming, “We want to keep our health care coverage – and our doctor.”
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