The Latest Perils of Obamacare

Commentary from Twila Brase, President CCHF


January 9, 2013


The latest perils of Obamacare have been revealed. The law is going to be more painful than many experts predicted. Besides the negative impact on quality of care, there will also be significant cost increases leading to reduced access to health insurance and patient care. 

Huge Premium Increases. The New York Times just reported double-digit increases coming for health insurance. The reporter reminds readers that "one of the biggest objectives" of the Obama administration's law was to "stem the rapid rise in insurance costs for consumers."  Before he was elected, Mr. Obama promised a $2,500 reduction in family premiums in his first term, but premiums went up by $3.065. Now that Obamacare has passed, we know that what's in it, among many other painful realities, are even higher premiums. Mark Bertolini, CEO at Aetna, predicts health insurance premiums will double for small businesses and individuals. I predict more people to drop their insurance and pay the penalty.
What You Don't Know. Smart Business interviewed William F. Hutter, president and CEO of Sequent, about the little-known aspects of the reform law. He revealed four items, three of which have not been discussed in the major media:

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

New perils of Obamacare are regularly being revealed. While we wait for its future repeal, CCHF is working to stop Obamacare by in substantive and creative ways. 
For example, our "Slow Obamacare" campaign against four Obamacare regulations sprung on the American public over the holidays brought in public comments from folks in California, Minnesota and Florida, to name a few. The Washington, D.C. publication, THE HILL, reported on our efforts. At our request, many of you asked HHS to extend the 30-day public comment deadlines to 90 days. I'm pleased to report that 81% of the comments on one proposed rule were from CCHF supporters. On another proposed rule, our supporter's comments comprise 71 percent of all comments. The federal agencies must respond to all comments, and we'll be working to secure those extended deadlines.
It can be done. It must be done. 
Twila Brase, RN, PHN
President, CCHF
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