Report Finds Obamacare Breaks Another Promise by Disrupting Employer Sponsored System

May 1, 2012

Two Obamacare promises are ringing hollow today:

  1. We will build on the employer sponsored system
  2. "If you like your health care plan, you can keep your health care plan." 

Despite constantly repeating these promises during Congressional debate and after it became law, the Administration’s promises are being undercut by a report issued by the House Ways and Means Committee which finds that the health care law “contains numerous policies that will either force or encourage employers to eliminate the health insurance coverage they currently offer their employees.”

Under the law, the “employer mandate” fines companies with more than 50 “full time equivalent” workers for failing to offer what Uncle Sam defines as “affordable” and “sufficient” health coverage to all full time workers. However, since the law’s penalty for not offering this prescribed coverage is far smaller than the costs associated with offering government defined “affordable” and “sufficient” insurance, employers are induced to drop coverage. This report quantifies (and cited) what the U.S. Chamber knew would happen.

Based on responses from 71 companies, the Committee found that the companies could save $28.6 billion in 2014 and $422.4 billion from 2014-2023 if they stopped offering health care insurance and paid a penalty to the government. This would affect 10.2 million employees and dependents. 

Because of this law, “[a]nyone who gets insurance through their job should be worried about what will happen next, because [the law provides] a distinct financial incentive for employers to terminate health care coverage,” said Ways and Means Committee Chairman Dave Camp (R-MI).

During the health care reform debate and after the law was enacted many expected that the impact on large employers would be minimal, believing that the law would not impose any additional burdens or costs on large employers who have historically offered coverage.   The Committee report counters this assumption. In fact, many provisions impose additional requirements on large employers and will drive up the cost of the coverage that they offer, if they offer it.   Regulators are fleshing out these requirements now and will continue to do so for months, if not years to come. The truth is we still don’t know just how different the law will require employer sponsored coverage to be or how much more it will cost.

Therefore, the employer mandate doesn’t pose to employers the simple choice of “Do I continue to offer the coverage that I am currently offering or pay a penalty?” It poses the subtler choice, “Do I continue to offer coverage that is and will be increasingly-more expensive and burdensome for me to offer or do I pay a penalty?” 

Fox News ran a good story on the negative effects the law could have on employers and employees.

I feel like a broken record, but the more we learn about the health care law, the more we discover it’s a 2000-page law full of broken promises. It's another reason we need to work for real health care reforms that lower costs and expands quality and choice.

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