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By Sally C Pipes
President and CEO Pacific Research Institute 

Businesses dropping employee insurance as too costly

Guest Commentary

 


Some 60 percent of Americans—nearly 160 million people—get insurance through their jobs. Because of Obamacare, that number is about to nosedive.

The president’s signature law is hiking the cost of health insurance for American businesses of all sizes. They’re responding by dumping coverage for workers, spouses, and retirees.

Even though the employer mandate, which requires all firms with 50 or more full-time staffers to provide health coverage or pay a fine, has been delayed by one year, the employer health insurance Market is slowly bleeding out.

A few weeks ago, 30,000 grocery workers in Washington state threatened to go on strike after several supermarket chains announced plans to drop health benefits for part-time workers.

Obamacare is even taking away the benefits of full-time workers—by encouraging their employers to cut their hours and rechristen them as part-timers. A survey conducted by the nonprofit International Foundation of Employee Benefit Plans found that 15 percent of employers subject to the mandate planned to cut hours in order to reduce the number of people they’d have to cover.

Spouses also are learning firsthand how Obamacare will destabilize their families’ benefits. According to a Towers Watson survey, 12 percent of employers plan to drop coverage for spouses next year, up from 4 percent this year.

Retirees, too, will increasingly find themselves pushed into Obamacare’s exchanges. Consulting firm Aon Hewitt found that nearly two-thirds of the companies it surveyed plan to “review their retiree health care strategy in light of health care reform.”

To fight back against Obamacare-fueled cost increases, many companies are turning to consumer-directed health plans, which typically pair low-premium, high-deductible policies with tax-advantaged Health Savings Accounts (HSAs). These plans empower patients to take control of their care. They can save money tax-free in their HSAs and use the proceeds for co-payments and other out-of-pocket costs. And because patients actually own their healthcare dollars, they have strong incentives to spend wisely. That dose of Market discipline helps lower overall health costs.

HSAs are now the second-most popular employer-provided plan. Aon Hewitt says that they could become the leader within three to five years.

Unfortunately, Obamacare attempts to squash this consumer-directed approach by capping deductibles and requiring all policies to cover a wide array of expensive benefits. The law’s supporters claim that its rules will ensure that patients get high-quality coverage.

But as the turmoil in the employer-sponsored insurance Market demonstrates, Obamacare may instead ensure that Americans get no coverage at all.

 

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