HealthCare Reform Will Ruin Your Insurance And Your Job

The healthcare reform that is being pushed by the President and Democrats in Congress is a terrible bill.  It's purpose is very clearly designed to end private insurance and move everyone in the country towards the public option, socializing healthcare in effect, while pretending that choice is still an option.

It would be one thing if Obama and Reid and Pelosi came out and said they liked socialist healthcare, and thought the country should move in that direction.  If they admitted the expense, and the likely destruction of private insurance, you could say they won the election and decided to move the country in that direction.  But that's not what they're doing.

They lie about the costs (like Russ Carnahan's ridiculous statement that healthcare will save $6 billion eventually).  They claim no one will be forced on the public option. They say we have to act right now, and anyone who opposes them is playing with people's lives.

There's no other way to address this then to say they are lying, and want to push this through quickly because they know that the more people think this through, the less they like it.

Forget the amendments and the negotiations about how and who will pay for it.  Let me explain what the bill is from the standpoint of a small business owner.  I've read the bill that was presented last week.  I know what does, and as I talk to other small business owners, they agree with me.  Doing nothing, is better than passing any version of this bill.

 

My reading came from this version of the bill.  Note that three versions of the House bill are on the table, and our representatives are already defending themselves by saying the final bill isn't ready.  This is a stalling tactic, designed to deflect criticism until it is too late.  If this bill come up to a vote, the final version will not be ready until after the House and Senate vote on it.

I. Grandfathered Plans (p.17) The bill begins with a grandfathered clause for current health plans.  If you are in a current plan, it's considered acceptable for 5 years.  That's what Obama means when he says you can keep your current insurance.  Of course, if your premium goes up and you want to switch, you're forced into another coverage.  If your provider drops you or goes out of business, or if your employer drops their coverage, you'll lose that insurance.  Basically, if you have coverage, you can keep it but not change it for five years.  It's a sucker's bet.  Companies change their insurance all the time, shopping around for the best deal.  There's no more of that.  You have to keep your current insurance, or you're under the new plan, with new mandates.  So right from the beginning, the employer's main avenue in controlling costs is taken away. You get your current coverage, but nothing better, and only at increasing costs. 

II. Premiums Cannot Vary (p.21) - This section talks about premiums, a major pain point for small businesses and employees.  In this section, premiums are not allowed to possess too much variance between plans.  This initially sounds like a good idea, until you realize that once again, we're preventing companies from shopping around for a good deal.  As premiums can't vary much, the market (or what's left of it) has to keep premiums high for everyone.  While the current markets rewards those who negotiate well and have lots of employees, the new market prevents shopping around, as all premiums will be about the same.  If you can't get cost savings, most plans will be the same.

III. Nondiscrimination in Benefits. (p.23) - This section lays out the base level of benefits for a health plan, including mental health and substance abuse disorder benefits.  Again, this limits competition.  If an employer doesn't want to cover alcoholics and drug users and those with real and imagined depression, they're forced to.  It levels the other area of cost-cutting, creating a level of benefits that is the same at all companies.

At this point, you begin to see that all of the new health insurance will be the same.  Same coverage, same price, and once your plan changes, you're moved to the new ones.  We're all getting generic health plans, no matter which insurance company name is on the product.  Competiton is eliminated in new plans.

The bill then introduces the Health Insurance Exchange, where all health insurance is to be purchased once the grandfathered plans are abandoned or run out after five years.  All insurance is regulated by the government at this point.

In addition to regulating all aspects of private converage, the government offers the public option, which competes with both employer coverage and individual insurance (which also is sold through the exchange).  The public option is the catchall.  If you don't have insurance, or your employer doesn't offer it, you get the public option, or can pay for individual insurance that meets the same requirements (all insurance is equal because it has to meet the same premium variance and benefit coverage).

And then here comes the whopper.

IV. Penalty For Not Covering Insurance: p.149 - If you as an employer do not currently offer insurance, you will pay an 8% penalty on the average wage of each of your employees.  There's no lowering the salary of your employees to pay. If you lower the salary of your employees to pay for the penalty, you pay the lowered salary amount and the premium.  This prevents employers from pushing the cost onto the employee.

WHAT DOES THIS MEAN?

I.  You're going to lose your current insurance.

The reform bill will prevent companies from shopping around for low rates.  You can keep your old insurance, but if premiums rise, you're stuck.  Premiums on grandfathered plans will skyrocket, as it will represent the only area where profit can be made for insurance companies.  And even if you can take five years of astronomical premiums, at the end, your insurance is gone, replaced with Obamacare.

New companies have to take Obamacare, and existing companies will eventually be driven to take Obamacare.  So much for keeping insurance you're happy with.

II.  Employers will dump their private insurance in favor of Obamacare.

Faced with rising premiums and no relief, many companies will simply choose to eliminate health insurance altogether.  8% of a salary is very low for health benefits.  Most small businesses I speak to are at 10-15% or higher for healthcare premiums.  Dumping their employees off onto the public option is an immediate cost saver.  They save 2-7% of the salaries, and no longer have to deal with the headaches of offering benefits.  Some companies will attempt to offer coverage to avoid the stigma of the public plan, but enough employers will ditch insurance to raise premiums in the private market.  As some insurance companies fail, some companies will have no choice.  Insurance companies will be squeezed between benefits and premiums, and many will fail.  The result will be a large number of companies and individuals forced into the public option, even if they would prefer private insurance.

III. Small Businesses will layoff more employees

Small businesses who currently don't offer insurance will be forced to lay off 1 of out of 10 workers.  Since you can't lower the salary of an employee to cover health insurance premiums, small business owners will be forced to cut payroll by 8%.  In addition, the surtax on the wealthiest will add additional burdens on the owners, who will be paying 8% of their payroll plus 2-3% more of their income.  The result will be layoffs.

IV. Small businesses will hire new workers at lower rates

Owners won't be able to lower salaries of workers, but we can hire new workers at lower rates to cut the fee and save money.  This is something you learn in temporary staffing.  When a company demands a rebate, we cut the salaries of the contractors.  When we hire someone new, we add the cost of the rebate into the salary, hiring people for less money.  When only a few companies do this, it depresses wages, but employees can switch companies.  When every company is forced to pay 8%, the result will be lower wages.  In addition, companies on the new private insurance will be paying less as well, seeing as the total compensation is greater for the private insurance.

In effect, the public option makes it easy for small business owners to throw up their hands and let the government do all the work on healthcare.

Of course, someone has to pay for the public option.  Revenues from the Treasury back up costs on the public option, which means that if too many people are on the public option, taxes will have to go up.  Private plans will have to raise premiums to stay in business, but the public option can raid from the General Fund, and it will be over budget every year, as more and more people join the public option.

V.  The 8% penalty will rise in future years.

Think of government as the ultimate big box store.  It moves into town, drives all its competitors out of business with artificially low prices, and when the competition is gone, raises prices.  This is what the public option will have to do.  Companies will take the 8% option to save money in the beginning, but that won't be enough.  The 8% will rise slowly over time, until it's back up to 15% of more for not covering costs.  If the 8% doesn't rise, corporate and personal income taxes (or a new VAT) will have to come into play. 

Final Results

1. Everyone but the richest among us loses their current insurance
2. Most Americans end up on the public option (which will transition to single payer when the numbers are big enough)
3.  Wages and hiring will be chronically depressed
4. Rates for the public option will rise, as will taxes.
5. Rationing will set in as insurance companies fail, and payments are negotiated lower.
6.  With too few people in the private insurance market, only boutique policies for the ultra wealthy will be feasible.
7.  The infrastructure built up by a strong private sector will begin to age (as it has in England), and care will suffer, along with new treatments and new drugs.

This is the end result of the bill.  Those seven points will happen, and in truth, that is the point of this healthcare "reform."  There are no negotiations that will fix it.  There are no taxes, and no blue ribbon panels that can get around it. The purpose of this bill is to start America towards a single payer system by destroying private insurance and the free market.  Once there, you can never go back to a strong private market.

Anyone who tells you different either hasn't read the bill, doesn't understand it, or is a lying two-faced socialist who thinks you're too stupid to understand what they are trying to do. And for the record, keep in mind that no staffer of McCaskill or any other representative would dare discuss this in public.  Their only hope is you shut up, sit down, and let this pass without complaint.

Barack Obama has said I'm playing with people's lives for opposing him.  There is no good faith negotiating which such a person.  This plan must be defeated, and those who push it kicked out of office and run out of D.C.

It's time to get to work.

Comments

[5th District]

Thank you for such a well written expose of the debacle the politariti in DC are attempting to visit upon us including our Congressman, Reverend Emanuel Cleaver, who has bravely taken the pledge that if the public option is dropped he will not vote for health care reform.

I have a reform idea for Cleaver. Since he is a big believer in government provided health care he must lead the way by only using Truman Medical with no special perks for all his needs. Good enough for us, good enough for Cleaver.

[Molly]

Thank you for compiling the specifics and making it comprehensible. The deceit used by our representatives to whitewash this plan for public consumption is striking. What are the odds that any amount of opposition to the plan will have an effect? Very little, I fear.

The insurance industry seems to be a big beneficiary of this plan. No surprise since they are one of the largest lobbies in Congress. No doubt insurance companies will immediately dump unprofitable cases on the public plan and in the absence of competition, raise premiums. I expect mine to skyrocket. Once again, thanks to Congress, the spoils will go to big business and Wall Street at the expense of small business and taxpayers. The effects to an economy already on life-support will likely be devastating.

[Sheila Dunphy]

"It's purpose is very clearly designed to end private insurance and move everyone in the country towards the public option"

Nonsense.