The unintended consequences of ObamaCare keep piling up and have the distinct possibility of out-weighing the intended consequences.
The latest ricochet was the announcements by several major employers, Walgreens, IBM, Time Warner, Sears and Darden Restaurants, that they would send big chunks of their workforces to private exchanges for individual policies.
They are moving from offering coverage through a company health plan to a defined contribution system. Each worker will be given a check to buy his or her own coverage from a menu of different plans.
It’s looking similar to the massive shift that started a decade ago when companies began the move to defined contributions to 401k plans for retirement and away from pension plans with a defined benefit.
ObamaCare (ACA) did not mandate or encourage this upheaval in the private sector, but the new federal law has triggered a reassessment of the health benefit across the private sector.
Medium and large companies have already been stampeding for the last decade toward a disruptive new business model for the delivery of care as a replacement for the long busted economic model. They are rapidly adopting self-insurance, consumer-driven plans, transparency on price and quality, payment reform, on-site primary care and proactive chronic disease management.
In a way, ObamaCare has been a monumental distraction from what I call the real reform at the grassroots level.
Amidst the confusion caused by the complicated law, some negative outcomes are taking shape:
• Companies are doing summersaults to stay under the 50 employees, where ACA penalties will kick in for dropping coverage.
• Companies are restructuring their workforces to keep part-time workers below 30 hours, the dividing line for benefits.
• Major health insurers are opting out of offering individual and small group policies on public exchanges in many states.
• Some regions of states will have only a couple of carriers, some very small ones, offering policies on the exchanges.
• In Wisconsin, the state’s high-risk pool is being terminated, a default to the new federal safety net. The pool has worked well.
• Early returns point to sharply higher premiums in many states. Federal subsidies will offset the spikes in the rates, but the premiums themselves will still be higher. That will negatively impact individuals who don’t qualify for subsidies.
There are still a great number of unknowns on how the law will shake out. When known, there will be additional unintended consequences. For example:
• Many young healthies may forgo coverage and premiums, choosing to pay the small fine in greater numbers than projected. That could undercut the revenue structure of ObamaCare.
• More companies than projected could opt out of providing a health benefit and pay the $2000 per employee penalty instead. Only 60% of companies now offer a health benefit. My guess is that it will be 50% when ACA is fully implemented.
• Because of compressed rate banding, companies with young healthy workers my send their people to the exchanges to escape sharply higher premiums.
• Intended to greatly improve access, ACA may leave a majority of the nation’s 47 million uninsured still uncovered.
This long list of uncertainties and possible adverse outcomes should not surprise. ObamaCare was an inside-the-beltway concoction. Unlike the private sector reforms, which have been tested in the real world, ACA is anything but pragmatic.
Only time will tell if ObamaCare will settle out as a winner or loser.