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If You Like It, You Might Not Be Able to Keep It

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By:
Date:
Location: Washington, DC

If you like your health care plan, you can keep your health care plan." That is what we were all promised during and after the health care debate. Many were skeptical, and it turns out they have good reason. A new report shows that many of the 170 million American workers covered by their employers might not be so lucky.

A recent survey of seventy-one Fortune 100 companies commissioned by the Ways & Means Committee reveals that the health care law actually incentivizes employers to drop coverage through what was known as the employer mandate. Starting in 2014, this mandate was supposed to force employers into providing coverage by imposing a $2,000-per-employee fine on businesses that do not offer "affordable" health insurance for their employees.

So what happened? Economics.

In 2014, the bulk of the health care law -- and the exorbitant costs that come with it -- will go into effect. When the mandate goes into effect, it will be cheaper for many businesses to pay a fine than to offer health insurance. The seventy-one businesses surveyed for the report would spend $38.4 billion on insurance for active employees in 2014, as opposed to $9.9 billion in fines for dropping insurance coverage altogether.

The difference is $28.6 billion in savings, or about $400 million on average per business, for choosing to pay a penalty instead of offering insurance. The discrepancy is expected to grow even wider in the future. Even if an employer wants to continue to offer quality, affordable health care as a benefit and service for employees, he or she would probably find it difficult to make the math work when competitors drop insurance coverage in the face of rising health insurance costs in favor of the cheaper penalty.

For the seventy-one businesses surveyed, they would have a choice from the years 2014-2023 of spending an estimated $550.6 billion on health care for employees or $128.3 billion in fines. That is a $422.4 billion difference, or $5.9 billion per business surveyed -- savings that are too large for most businesses to ignore.

Eighty-four percent of employers surveyed in the study believe that their health care costs will be higher than what they have paid in the last five years. It comes as no surprise then that consulting firm McKinsey and Co. found that thirty percent of employers will likely stop offering their employees health coverage after 2014. Additionally, eighty-four percent of businesses surveyed in a PricewaterhouseCoopers study said that they are likely to re-evaluate their benefits programs as a result of the health care law.

No one could blame them. Since the health care law increases insurance costs and financially incentivizes businesses to drop coverage for employees, the decision of offering prohibitively expensive insurance or paying a comparatively modest fine is unfortunately all too simple. So where does that leave an employee? Good luck finding a new health care plan you like in an insurance exchange system by paying out of your own pocket.

Effective health care reform should make it easier to access quality, affordable health care, not take it away. As we continue to work to repeal this disastrous law, Republicans are focusing our replace efforts on ways to do just that by bending the cost curve, increasing competition to lower prices, and cutting down on waste, fraud and abuse.


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