The Latest Perils of Obamacare

1)    Health plans can refuse to offer insurance to employers. The law has two “minimum participation” standards. Either 80 percent of all eligible employees must take coverage from the employer, or 70 percent of those who decide  not to use their spouse’s plan must take coverage. If these standards are not met, according to Hutter, “technically no carrier has to write it coverage. That would force the company into a state health care exchange because it would be unable to provide a health insurance program for employees,” reports Smart Business.

According to Hutter, companies with 75 to 150 employees will be challenged to meet the standards. If they cannot offer coverage, they’ll have to pay $2,000 per employee as a nondeductible penalty. With 100 full-time employees (30 or more hours per week), this means a $200,000 tax, and they still don’t have a health plan to offer. 

2)    Employers that offer insurance can be penalized. Even if an employer offers health insurance, the employees have the option of refusing it and buying insurance from the state exchange because of the premium subsidies available. A family of four making $80,000 a year can get a subsidy. Employers must pay a $3,000 penalty for each employee receiving a subsidy. 

3)    Obamacare exchange breaks down workplace loyalties. Today’s employers make decisions about health insurance with the employees and their families in mind. If the penalty for providing insurance is less than the cost of coverage, the company’s loyalty to the employees may change. In addition, employees who can get their health insurance through the government exchange realize they are no longer dependent on their employer. They can now work wherever they want. [Alternatively, let me suggest that insurance is a poor standard for loyalty, and employee freedom can be accomplished without an Exchange: by giving the tax deduction to employees, not employers.]

4)    Higher Costs Due to MLR. Today, 75 percent of premium dollars is used for insurance claims, and 25 percent goes toward administration, profits, compensation, rent, and other expenses. Obamacare requires a minimum of 85 percent of premiums be paid for medical claims. This is called the "minimum loss ratio" (MLR). Since insurers are unlikely to lower the costs for administration, profit, compensation, etc., and certain costs like rent cannot be changed, Hutter says health plans will raise premiums to arrive at the correct ratio.