In just five days, while Republicans in Congress furiously attempt to cut off funding for Obamacare, the federal health care insurance exchanges “go live” for the first time, ushering in a new era of federal government control over health care. Health insurance as we know it will never be the same. Employer sponsored health plans may quickly go the way of the Dodo, and we will soon be well down the path towards a single-payer health care system. Here’s why.
Under Obamacare, individuals, regardless of income, are required to carry health care insurance, whether their employer provides it or not. If their employer does not provide insurance, individuals are required to purchase coverage through the federally subsidized health care insurance exchanges or pay a fine. For those earning between 100 percent and 400 percent of the federal poverty level (between $23,500 and $94,000 of income for a family of four), the federal government will subsidize much of the cost to purchase insurance. Meanwhile employers who do not provide health care insurance will pay the federal government a “tax” or penalty, beginning in 2015, of up to $2,000 per employee.
Employers, whose finance personnel are usually pretty good at math, are realizing that they can save a bunch of money if they (1) stop providing health care to their employees, (2) push their employees to the federal insurance exchanges, and (3) pay the per employee “tax.” Since most companies that currently offer health insurance as part of their benefits package pay a whole lot more than $2,000 per employee per year for health care, the economic incentives to push their employees to the federally subsidized exchanges are quite powerful. And since most employees will qualify for some sort of federal health care subsidy to purchase insurance through the exchange, most will not make much of a fuss over such a move.
According to a McKinsey & Company survey, conducted to determine the likelihood of employers dropping insurance under Obamacare, “overall, 30 percent of employers will definitely or probably stop offering employer sponsored insurance… Among employers with high awareness of reform, this probability increases to more than 50 percent.” The more employers learn about Obamacare, the less likely they are to hold onto their employer sponsored health care plans, and once one employer in a market takes the leap, it is likely that their competitors will do the same. Just last week, Walgreens announced that it will shift all of its 180,000 employees from an employer sponsored health plan to the insurance exchanges. More such announcements are inevitable.
The Congressional Budget Office, when projecting the full cost of Obamacare, anticipated that only 7 percent of employers currently offering health insurance would shift their employees onto the federally subsidized insurance exchanges. That number, when it is all said and done, could be 10 times that amount. The unanticipated additional expense of such cost shifting from employers to taxpayers will likely reach into the hundreds of billions of dollars, perhaps even trillions; money we simply do not have as a country.
It is clear to me that the end goal of the Obamacare legislation is to create a single-payer, socialized health care system in this country. Beginning next week, we will be halfway there. As millions, then tens of millions, then hundreds of millions of Americans begin purchasing their health care insurance through a federally administered health insurance exchange, through which only federally approved insurance plans can be offered, Americans will soon find themselves “shopping” for health insurance in a market where every product is nearly identical and every price resolves towards the mean. The next step will be a government insurance option. You can count on it.
Dan Liljenquist is a former state senator and U.S. Senate candidate.