While most Main Street Americans have yet to get a glimpse of the Patient Protection and Affordable Care Act (ObamaCare) in action, states and private employers are already discovering it harbors more than a few challenges for our already complicated and expensive employer sponsored health insurance based healthcare. As the video below (created by Gary Campbell, the actual CEO of Centura Health – Colorado’s largest hospital system) humorously points out, corporations don’t do hard. They do outsourcing.
Management Problem: Health management seems really, really hard
Successful Solution: Create an organization (outsource) and hold meetings
Of course, the best kind of outsourcing is the kind that saves corporate profits.
And no “outsourcee” organization works harder or better for the bottom line of corporations than — our federal government. Corporate welfare has become institutionalize in our government at great expense to American taxpayers. And the Patient Protection and Affordable Care Act (ObamaCare) is just the latest best example of legislation that is touted as helping average americans, but actually works better at helping corporation profits.
While it’s too early to proclaim the demise of job-based coverage, corporate number crunchers are looking at options that could lead to major changes.
–Richardo Alonso-Zaldivar, Employers looking at health insurance options, Associated Press Writer
Last month a group of restaurants, retailers, colleges and insurers demanded waivers from the new health care reform mandates for their “mini-med” plans. The health insurance plans they offered to their low-wage, part-time or seasonal employees (see McDonald’s May Drop Health Plan).
Employers and insurers were upset that the new mandated minimum annual dollar limit — $750,000 in 2011 – on essential benefits that health care plans must now provide is higher than current “mini-med” plan maximums.
Then there is the fact that current “mini-med” plans do not meet the new medical loss ratio requirements of 80% to 85% for insurers. According to employers (and issurers) that MLR rate (the portion insurer must pay for actual medical care) is unrealistic for “mini-med plans since they have high administrative costs owing to frequent worker turnover and relatively low spending on claims.
Employer Problem: Increases in employee health insurance costs for low-wage, part-time or seasonal employees
Successful Solution: Seek waivers, then outsource to federal government in 2014 when medicaid expands and gives large subsidies to lower-income people to buy coverage
Apparently the Department of Health and Human Services finds this approach agreeable. It went on a “mini-med” waiver spree, granting 30 one-year waivers for coverage of millions of employees in record time.
In nearly all cases, waiver applications have been approved within two weeks of their receipt. In some cases, HHS has approved waivers within days. [snip]
The waiver affecting the largest group of enrollees was granted to the United Federation of Teachers Welfare Fund in New York, whose mini-med plan has 351,000 enrollees, according to its filing. Other mini-med plan waivers were approved for CIGNA Healthcare for plans with 265,000 enrollees, Aetna Inc. for plans covering 209,423 enrollees and BCS Insurance Group for plans with 115,000 enrollees—including those provided to Oak Brook, Ill.-based fast-food restaurant chain McDonald’s Corp.
–Jerry Geisel, HHS swiftly OKs waivers for ‘mini-med’ sponsors, Business Insurance
Not that you can really blame employers. These are tough economic times. It is hard to justify paying more for anything, especially when there is a legal way to pay less. But ObamaCare was suppose to be about expanding care and coverage.
Those 30 one-year waivers just ensured that neither happens for those employees.
And with the economy getting worse, not better is it any surprise that private employers as well as state and local governments are eyeing an increasingly attractive avenue to substantially cut employment expenses — by dropping their existing health insurance coverage and helping their employees get their health insurance though an “exchange”.
Employer Problem : Rising employee health insurance costs.
Successful Solution: Outsource employee health insurance to federal government “exchange”, pay a federal penalty of $2,000 for each employee without coverage.
…the Patient Protection and Affordable Care Act (President Obama’s health reform) created a system of extensive federal subsidies for the purchase of health insurance through new organizations called “exchanges.” [snip]
In 2014, when these exchanges come into operation, a typical family of four with an annual income of $90,000 and a 45-year-old policy holder qualifies for a federal subsidy of 40% of their health-insurance cost. For that same family with an income of $50,000 (close to the median family income in America), the subsidy is 76% of the cost. [snip]
The authors of health reform primarily targeted the uninsured and those now buying expensive individual policies. But there’s a very large third group that can also enter and that may have been grossly underestimated: the 170 million Americans who currently have employer-sponsored group insurance. Because of the magnitude of the new subsidies created by Congress, the economics become compelling for many employers to simply drop coverage and help their employees obtain replacement coverage through an exchange.[snip]
Local governments will find eliminating all coverage particularly attractive, as many of them are small and will thus incur minor or no penalties; many have health plans that will not meet the minimum benefit threshold, and so they’ll see a substantial and unavoidable increase in cost if they continue providing benefits under the new federal rules.
…By 2014, there will be a mini-industry of consultants knocking on employers’ doors to explain the new opportunity. And in the years after 2014, the economics just keep getting better.
— Philip Bredesen, ObamaCare’s Incentive to Drop Insurance, WSJ (h/t LisaB)
Given the well-known nature of corporations to seek ever higher profits and outsourcing as the behavior of choice to achieve those profits, it would seems reasonable to consider the overly endowed “exchange” incentives in ObamaCare as a plan feature and not a flaw. A nice little backdoor path to taxpayer funded health insurance while boosting employer and insurer bottom lines in the process.
After all, if employers are not paying the true and full cost of employee coverage on the “exchange”, then employers are being subsidized by the government. And that is welfare — for the employer.
But could all this outsourcing/employer welfare backfire? What happens if it is too successful?
A new study by the Lewin Group estimates that 28.6 million Americans will be eligible for a federal subsidy to purchase health insurance beginning in 2014 at a projected cost to tax payers in excess of $110 billion. This estimate is dramatically higher (578%) than the cost of these subsidies forecast by the Congressional Budget Office (CBO) prior to the bill’s enactment into law. If the new estimate is correct, it would mean that instead of lowering the deficit by $143 billion over ten years—a claim widely touted by proponents of the law— the legislation would begin adding to the deficit as early as 2015, only one year after major provisions of the law go into effect.
…The CBO’s final analysis of the bill enacted into law projected that only 7 million Americans would begin receiving these subsidies in 2014 at a total budgetary cost of $19 billion. This figure is $91 billion lower than the amount estimated by the Lewin Group. [snip]
…the Families USA report “looks exclusively at how many people will be eligible for the new premium tax credits, whereas CBO estimates how many people will actually enroll.”
The CBO projects a gradual increase in the number of individuals receiving subsidies between 2014 and 2019. Starting at 7 million people in 2014 and increasing to 19 million by 2019. The Lewin Group estimate that 28.6 million Americans will be eligible for this subsidy in 2014 is 50% higher than even the outer range of the CBO’s forecast. [snip]
How much can the government afford to take on? Especially when millions of these enrollees will be merely changing the payee of their health insurance from their employer to American taxpayers.
Federal Government Problem : Too many “exchange” and Medicaid enrollees, signing up too soon, adding to sky-rocketing federal deficits
Successful Solution: ah, ???
Don’t get me wrong, I want everyone to have healthcare. I just can’t see how adding these twisted mutations to our already nightmarish employer sponsored, insurance based, healthcare system is going to do anything but grossly enhance the speed of our upwardly spiraling healthcare and health insurance costs as well as our downwardly spiraling quality of real healthcare.
And then there are our taxes …