Employers cite Obamcare-related costs as part of the reason they are pulling back on heathcare insurance benefits.
Although President Obama said in spring 2013 that little would change for the 85% to 90% of Americans who already have healcare insurance coverage, only that “their insurance is stronger, better, more secure than it was before,” that does not appear to be the case at a growing number of companies. United Parcel Service (UPS, Fortune 500) told employees that health reform is contributing a 4% increase to the cost of coverage for 2014, while health care inflation adds another 7.25%. And Delta Air Lines (DAL, Fortune 500) said that Obamacare and inflation would increase costs by $100 million, though it only identifies $38 million as due to health reform.
Major Obamacare fees and taxes that employers say will raise their costs: The transitional reinsurance fee, the Patient Centered Outcomes Research Institute fee, the health insurer fee, the ‘Cadillac’ tax, and the individual mandate. Aside from these items boosting health insurance costs for employers, experts point out that companies have been shifting more of the burden to workers for years.
Strange as it seems, many employees in 2014 may ask their employers not to offer them health insurance benefits, owing to a quirk in Obamacare that could financially penalize certain workers and their families.
Some employees will find it less expensive to have an employer not offer health insurance subsidies for them and their families, and then instead buy insurance with government subsidies on the Obamacare state health exchanges.
For Obamacare to succeed, millions of healthy, young, uninsured Americans must join a health plan to counterbalance the sicker millions who are most likely to buy insurance. If not, then health plans on the exchanges will have to raise premiums. Healthier Americans will probably select cheaper “bronze plans.” Insurers will pursue healthy people. In some states, large insurers are not going to participate in exchanges to avoid their strictures. On the outside, they could still sell inexpensive plans to skim off the healthy and avoid a rule that insurers on the exchanges must also offer more generous “silver” and “gold” plans.
Some studies suggest that more competition among health insurers leads to lower hospital fees on average and that premiums rise when insurer competition diminishes. But researchers have also found that top hospitals — which any decent plan must have on its network — increase their fees when more health plans compete for their business.
Obamacare calls for a 10 percent sales tax when you exposes yourself to potentially harmful, cancer-causing tanning rays, thus affecting everyone’s health-insurance premiums. An exception is if the tanning bed is offered as part of a gym or fitness center at no extra charge. Then no tax will be imposed. Obamacare includes 47 other tax provisions.
The Ohio Department of Insurance has announced that, based on the rates submitted by insurers to date, the average individual-market health insurance premium in 2014 will be about $420, “representing an increase of 88 percent” relative to 2013.
The author argues that the health insurance plans sold in the Obamacare exchanges next year are likely to be pricey relative to the benefits theyoffer. The health insurers were hoping that many young, healthy individuals would enter the exchanges, subsidzing older, and perhaps sicker members. For many young people, however, the coverage won’t be worth its cost. Moreover, early customers will be those in greatest need of medical care, who also have the highest medical costs.