July 18, 2010
A preview of what Obamacare has in store for us
Ed Lasky
Massachusetts was the role model for ObamaCare and has provided us a glimpse of the future that awaits us. Not only has the state been forced to clamp down on payments to health care providers and tried to bully health insurance companies into bankruptcy (by trying to force them to lower their premiums) but now businesses are canceling health coverage for their workers and telling them to become wards of the state:
The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state's already-stressed budget.
Since April 1, the date many insurance contracts are renewed for small businesses, the owners of about 90 small companies terminated their insurance plans with Braintree-based broker Jeff Rich and indicated in a follow-up survey that they were relying on publicly-funded insurance for their employees.
Companies pay a relatively small fine for not offering health care insurance for employees - roughly $295 annually - so they find it worthwhile to drop the coverage, pay the penalty, and let Massachusetts taxpayers take over the healthcare premiums instead.
How will this dynamic work when Obamacare kicks in?
Come 2014, when the bulk of the federal health care law goes into effect, the penalties for small companies that do not provide health insurance coverage will be less onerous than those in Massachusetts. That could tempt more small companies to opt out nationally, sending more workers to the public rolls - if health care costs can't be restrained, some analysts said.
Now, the health care laws in Massachusetts are a bit different than those that will operate at the national level. For example, Massachusetts imposes penalties for employers with more than 11 full-time employees while the federal will penalize companies that employ more than 50 workers. But the incentive for companies to drop health care coverage for workers will be even greater.
The result?
The projected expenses for Obamacare have been woefully understated. Businesses across America will respond in the economically most rational way: have taxpayers pick up the tab..