ObamaCare Provides Businesses Incentives To Drop Health Care Programs

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Barack Obama
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Dave Camp (R-MI), Chairman of the Wars and Means Committee, released a report yesterday that contained some bad news: many employers are likely to dump their health care plans because it would be cheaper to just pay the fine levied by the government as opposed to carrying and covering their employees.

“Let me be exactly clear about what health care reform means to you. First of all, if you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.” – President Obama.


“You know, we said from the start that…that it was going to be important for us to be consistent in saying to people if you can have your…if you want to keep the health insurance you’ve got, you can keep it; that you’re not going to have anybody getting in between you and your doctor in your decision making. And I think that some of the provisions that got snuck in might have violated that pledge.” – President Obama.

The report states that in 2010, “nearly 170 million Americans received health coverage from their employer, making employer-sponsored insurance (ESI) the largest single source of health coverage in the United States. Over half of those receiving ESI are women, nearly a quarter are children under the age of 18, and nearly three quarters of those receiving ESI are in families with children.”

Camp asked for and received information on the cost and coverage of the health insurance plans for the Fortune 100 companies, receiving information from 71 of the 100 companies. Camp’s findings are disturbing.

A mandate requires business with more than 50 full-time equivalent employees offer “affordable” health insurance to their employees or pay a fine ($2,000 per employee), but the cost of paying the fine is cheaper than the cost of providing health insurance.

Of the 71 companies that responded, savings of $28.6 billion would be achieved in total from all of the companies in 2014 alone by simply paying the fine instead of offering “affordable” health insurance. From 2014 through 2023, the savings would extend to an “astounding $422.4 billion” simply by paying the fine.

After taxes, the average individual employer (of the 71) would save $5.9 billion during the same time period (2014-2023.)

The report states that the employers have “overwhelmingly concluded increases in cost will accelerate in the years after the Democrats’ health care law is fully implemented.”

These 71 companies employ more than 5.9 million full and part-time workers in the United States in 2011. The $30.8 billion they paid (after taxes) covered more than 10.2 million lives in 2011, and 89% of the companies offered health insurance coverage to part-time employees.

The report shows that the employer mandate would put the number of jobs offered by these companies in “jeopardy” by pointing to the fact that “not all employers have the financial resources to provide coverage to their employees, and not all employees seek jobs to obtain ESI.” The costs that could face these companies that “cannot afford to provide health insurance coverage for their workers will face a massive increase in costs,” and some of those costs would cripple the companies involved, affecting the jobs of millions instead of just addressing their health care issues.

The strongest point: “Even if companies are not forced to eliminate jobs, the law creates a financial incentive for employers to drop coverage, save labor costs, and send employees to the government-run exchanges where some will receive taxpayer-funded subsidies.”

If it doesn’t make sense by providing incentive, what is the point?

The 71 employers spent an average of $5,197 on health insurance benefits, after taxes, for each employee in 2011. In 2014, that number would increase to $6,487, far exceeding the $2,000 fine.

Even the U.S. Chamber of Commerce released a warning saying “Despite promises that the health reform law would build on the existing employer sponsored system, the employer mandate will in fact undermine it. It will be more affordable for employers to pay the penalty for not offering coverage than to offer coverage itself. And so, ironically, the employer mandate incents employers to stop offering health care coverage.”

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