Failure of imagination We Can Believe In

How completely unsurprising. All emphasis mine:

The new health care law wasn’t supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations. But last week a leading manufacturer told workers their costs will jump partly because of the law. Also, a Democratic governor laid out a scheme for employers to get out of health care by shifting workers into taxpayer-subsidized insurance markets that open in 2014.

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. “The economics of dropping existing coverage is about to become very attractive to many employers, both public and private,” said Gov. Phil Bredesen, D-Tenn.

This is what they call in politics being “off message”. Out here in the real world we call it being honest. The scenario Phil is referring to should sound familiar to you, because I called it last year.

“I don’t think you are going to hear anybody publicly say ‘We’ve made a decision to drop insurance,’ ” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “What we are hearing in our meetings is, ‘We don’t want to be the first one to drop benefits, but we would be the fast second.’ We are hearing that a lot.” Deloitte is a major accounting and consulting firm.

This is because the first one to drop it would get a backlash, while the rest would be committing financial suicide to not follow along.

Employer health benefits have been a middle-class mainstay since World War II, when companies were encouraged to offer health insurance instead of pay raises. About 150 million workers and family members are now covered.

“Encouraged”…curious word choice there. Makes it sound like someone nicely said “how about health insurance instead?”, and they took them up on the idea. There were actually wage CAPS set by the government at the time, and benefits like health insurance came about due purely to a loophole in the law.  Basically, the reason people have been trained to cling to conglomerates regardless of opportunity for advancement is because during WW2 economists convinced the government that wage growth directly caused inflation.

Anyway, the gist of the law is a system of subsidies & tax penalties that, at the time, were supposed to simultaneously make coverage available to everyone & not alter the coverage that some already had.  Individuals required to buy insurance, employers penalized for not offering it, subsidies for purchase on exchanges.  The exchanges & tax penalty on employers is the rub:

Tennessee Gov. Bredesen said last week that employers could save big money by dropping their health plans and sending workers to buy coverage in the exchange. They’d face a fine of $2,000 per worker, but that’s still way less than the cost of providing health insurance.

Bredesen just couldn’t resist getting in a bit of laugh-bait though:

Employers could even afford to give workers a raise and still come out ahead, Bredesen wrote in a Wall Street Journal opinion piece.

Could.  But they won’t.  You know how much lobster that freed-up insurance money can buy?


About b-psycho

Left-libertarian blogger & occasional musician.
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2 Responses to Failure of imagination We Can Believe In

  1. Todd S. says:

    My employer has said the same thing, but it got me wondering as to what the current penalty for not providing coverage is. Is it more now? If not, then I don’t understand why they are all saying this now as it would have made more financial sense to not provide coverage all along.

  2. B Psycho says:

    W/r/t current health benefits, I suspect it’s less of a penalty thing than legacy cost from when labor had a better bargaining position. I did a search and couldn’t find anything about a penalty for not providing it prior to the “reform” bill.

    Ever since the first I learned about the reason insurance became employer based I’ve wondered about how different things would’ve been if those wage controls had never been installed. Maybe if not for that, wage growth would’ve kept up with inflation.

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