Thursday, August 29, 2013
Forty percent of U.S. companies to alter health care plans, drop coverage, due to Obamacare
by: J. D. Heyes
As the official start date for Obamacare draws ever closer, there is more evidence that the law simply won't perform as advertised and, in fact, will cause even greater harm to American society than without the "healthcare reform" it was supposedly crafted to deliver.
Particularly hard hit will be businesses that are going to be required to provide certain levels of health insurance coverage to their employees. The result is going to be a) higher costs to the businesses' customers; and b) a net loss in employment, especially full-time employment.
A new employer survey has found that a plurality of mid-sized and large businesses - 40 percent of 420 companies surveyed - said they are planning changes to the designs of their insurance plans next year and other changes to reduce employee related costs as a new excise tax imposed by Obamacare approaches with pricier plans.
Also, according to Towers Watson, the firm conducting the survey, 60 percent of companies look at private health insurance exchanges as one way of controlling their healthcare and administrative costs by dumping their employees into the state-run health insurance pools called for under the law - as predicted a couple of years ago.
No big changes soon, but they're coming
While most of the companies don't yet have near-term plans to make the big dump, clearly, they are coming. The companies who are looking to dump, by the way, collectively employ 8.7 million workers.
More from CNBC:
The study also found those same companies are increasingly unlikely to offer their employer-sponsored plan for retirees older than age 65 as Obamacare state insurance exchanges go into effect, and as Medicare remains available to those people.
The number of employers either very or somewhat likely to discontinue such plans for those retirees grows from 25 percent in 2014 to 44 percent in 2015, according to Towers Watson, the global professional services company....
That, too, has been foretold.
Still, the vast majority of the companies - 82 percent - believe it is "important" to offer existing workers subsidized health care, as part of their "employee value proposition" for 2014, the study found.
Also, 98 percent of the employers said they don't have definite plans to discontinue company health insurance plans next year or in 2015 and dump their workers into state exchanges. But how many of those companies will eventually change direction and dump sooner will depend in large part on several factors: how well the exchanges work (no one even knows yet how they will work); overall cost of coverage (will it stay the same, go up or, more likely, increase?); and any political changes to the law.
"Most companies very much still see health-care benefits as a core offering," Ron Fontanetta, a senior health-care consultant at Towers Watson, told CNBC. "It's a very visible benefit, and it garners a lot of attention among executives, in part because it's very visible to employees and also because it costs a lot."
Nevertheless, company-sponsored healthcare changes are afoot, and they are a) directly related to Obamacare; and b) anything but positive.
New tax increases looming
For instance, the Towers Watson study was released on the same day it was reported that UPS told its white-collar employees the company would no longer cover 15,000 working spouses, beginning next year, because of increased medical costs and "costs associated with the Affordable Care Act."
It's not that "greedy American corporations" want to discontinue health insurance coverage. CEOs see such coverage as a necessary perk that attracts a higher quality employee. But the reality is that Obamacare is going to boost costs, so firms are being forced to rethink the benefit.
Companies "are increasingly asking questions about 'where are we taking our future strategy? How does the challenge of offering health care reconcile with our broader financial goals as an organization?'" said Fontanetta. "They want to understand, increasingly, what are the different strategic pathways [the companies] might take," Fontanetta said.
The looming excise tax, by the way, becomes effective in 2018 - one of the law's many penalties, taxes, fees and punishments.