FLOTSAM & JETSAM: THE SLEEPER IN OBAMACARE

Tuesday, November 09, 2010

THE SLEEPER IN OBAMACARE

Sam Smith

I've been wondering why there is so much public opposition to Obamacare. Admittedly, it's one of the most mangled pieces of legislation I've ever run across, not because of its intentions, but because of the political and bureaucratic chaos involved in its composition.

When you have a bill that even the Congressional Research Service doesn't understand, you know there's a problem. Reported Politico last summer:

"Don’t bother trying to count up the number of agencies, boards and commissions created under the new health care law. Estimating the number is 'impossible,' a recent Congressional Research Service report says, and a true count 'unknowable.'”

Even so, that's not quite the sort of thing that creates a major campaign issue.

Far more significant is the provision that will required nearly all Americans to carry health insurance or pay a fine. Even Democrats polled by the Kaiser Foundation favor repeal of this section by a score of 49% to 44%. 68% of the general public wants it repealed.

This is clearly a cause of the resistance, though even opponents don't talk about it much and it would affect only about 3% of the workforce.

Other aspects of the bill actually get support from Republicans - like tax credits to small businesses that offer coverage, closing the Medicare prescription drug doughnut hole, and banning denial of coverage for previous conditions. The public in general supports five key ;provisions tested by Kaiser, four of them by more than 70%.

But It wasn't until I asked a Republican caller, during one of my appearances on Mark Thompson's Sirius/XM show, just what bugged him about the bill, that I stumbled upon a sleeper: the fact that many businesses may give up health insurance because the penalty is so much cheaper than paying for coverage. I suspect the word is out widely on this - even though we in the media have given it hardly any attention - and may help to explain the anger.

Here's how Human Resources News tells it:

|||||||||| How much cash would your company have to save by dumping its health plan – in exchange for paying penalties – to make up for the ill will it would create among workers?

Bad news for lawmakers that just assumed companies would keep providing health coverage even after the reform law’s mandates kicked in: New evidence shows that four major employers — Verizon, AT&T, John Deere and Caterpillar — have crunched the numbers so see whether they should “play or pay.”


Their conclusion? It’ll be cheaper — way cheaper — to pay the penalties to the government and drop their employee health insurance plan.

Of course nobody thought a company would pull the rug out from its employees by actually dropping coverage. But then again — nobody thought dropping coverage to pay a penalty would save a company 75%, and nearly $1.8 billion, off its healthcare bill. That’s what AT&T calculated it would save.

Caterpillar came to the same conclusion. It said it could shave 70% off its bill by doing the same thing. These findings come from internal documents recently reviewed by Congress. ||||||||||

Of course, the whole problem could have been solved by single payer health insurance - the most business-friendly approach one could imagine, but neither side was interested in anything that sensible.

So when you hear people calling for repeal of the health measure bear this in mind: in two important ways it could cost millions of Americans a lot of money - either through required policy purchase or through loss of employer-covered policies.

The Democrats still have a little less than two months to correct these two serious errors or they can just leave it to the GOP to make sure the thing becomes a complete mess.