“A new report prepared by Republicans on the House Ways and Means Committee suggests that companies would save billions of dollars by ending health insurance coverage for employees under Presidents Barack Obama’s health care reform law.
Based on an analysis of health care data received from 71 of the America’s Fortune 100 companies, the report found that if the companies terminate insurance coverage in favor of paying the $2,000 per employee penalty, they would incur a financial benefit.
According to the report, companies surveyed would save on average $400 million — or a total of $28.6 billion in 2014 — simply by putting their employees on the government exchanges.” – Fox News
Is this the biggest issue with this new Act?
Unfortunately, the answer in the end will most likely be no.
On the surface, this report by the GOP has shed the light on the fact that employers, under the Affordable Care Act, can now drop health benefits “per employee” and only face a fine of $2,000 (which is paid directly to the federal government). This, at the time of writing this bill, may have seemed like steep penalty, but what is coming to light is that employers on average tend to pick up roughly 50% to 75% of the total premiums for an employee’s health coverage which happens to be on average $15,000per year.
So now an employer has a choice;
A) Either continue health coverage for an employee to the tune of $7,500 to $11,225 annually
B) Pay a $2,000 fine that goes directly to the federal government for not covering said employee.
The bigger issue may not be the savings for companies or even the penalty they must pay to the government, but the other interpretation to the rules that go along with this – notice the “per employee” line.
Under the Affordable Care Act firms can now choose who they want to cover and who they choose not to cover when it come to health benefits.
In a nut shell, corporations can pick “key” people in the company and cover their health premiums while opting to not pick others.
This is unprecendentaed in the Modern Era.
Corporations have always had the option to not cover health benefits for their employees, but the choice to not make health coverage available affected every single person employed there. This one provision will now give a corporation the ability to say “we are only going to cover just the Directors of the company and nobody else”.
And the only penalty to do this will be a $2,000 fine for each uncovered employee.
So now, an employee, who by no fault of their own, could one day be told by the firm they have worked at for years that the company has just decided to no longer cover his/her health benefits and that she/he will now have to purchase an individual health plan from a private health insurance company.
Sounds great, doesn’t it?
Oh yeah and the hits keep on coming, because, under this same Act, that same employee who just got hit with the news of no longer being part of a “group plan” must now have , by regulations of this Act, adequate health coverage as soon as possible or face a fine that will paid directly to the federal government.
Ultimately, this new Act has;
- Paved the way for companies to save billions in health costs at the expense of their own employees
- Create a new revenue stream for the federal government (all those $2,000 fines)
- Open the door for health insurance companies to sell more health coverage to more people at individual rates instead of group rates – thus making more money for them.
To give a broader scope on what to expect when it comes to these health costs – in order for a female to just cover herself today for health insurance she can expect to incur a cost of roughly $5,300 per year.
Same woman who happens to be 63 today but who happens to smoke, have high blood pressure & high cholesterol can expect to pay roughly $11,000 for health insurance.
And in 28 short years when this 35 year old healthy woman will be 63 she can expect to have a bill for over $35,000 just to cover her health costs.
Do you think if this Act is still on the books when this women reaches 63 in 28 years the same company will pick up most of her health costs too or just take the fine?