Wednesday, August 7, 2013

Insights on Delaying Obamacare's Employer Mandate: Four Potential Unintended Consequences?

Which is it?
Look at we did!

Delaying the employer mandate for one year is simply more evidence of Obamacare's unworkable complexity, says detractors.

The delay is flexibility and democracy in action, says supporters. 

The Disease Management Care Blog is troubled by how Congress and the Obama administration underestimated the complexity of the local implementation of a one-size-fits-all national health program.  It also knows that the White House needs some Affordable Care Act (ACA's) elbow room.

To gain a better understand what's going on, check out this article appearing in the New England Journal

Recall that the intent of the ACA was to preserve employer-based insurance while enabling individuals to access similar levels of coverage in on-line exchanges. Toss in some income-based subsidies on the upside along with IRS penalties on the downside, and the intended outcome is that millions of Americans will enter the national risk pools. That, in turn, should lead to premium drops and greater access to health care.

So what could be the impact of the delay?

First off, there's what won't happen. The authors estimate that 2014 will be business-as usual for the vast majority of persons with employer-based insurance.

But here's four things that could happen:

1. Approximately 5 million part-time workers may be closed out from access to their employer's insurance for another year. In addition, the $10 billion in government income from the $2000-per-worker) will be lost.  Both these numbers are small potatoes in a trillion-dollar enterprise involving tens of millions of workers, unless, of course, you happen to be one of those workers.

2. Millions of employed full time workers will continue to take a pass on taking the paycheck deduction for their employer-based insurance.  Whether they change their mind in 2014 will not depend on how hard their employers work to sign them up, but how aggressively the IRS pursues the individual mandate. 

3. Attached to the employer mandate were regulations that would have forced employers with a workforce of greater than 50 persons to offer competitive (read "low") insurance premiums.  Since that's also been delayed, employers and their employees who want insurance have an even greater incentive to access the on-line individual exchanges.  Employers get to reduce their insurance costs while individuals get to take advantage of those upside subsidies. The employer-employee win-win arrangement could not only undercut employer-based insurance, but "triple" the Fed's subsidy budget.

4. The DMCB's physician colleagues are not immune either.  There is emerging evidence that the individual exchanges are likely to offer "frugal" insurance plans.  Early indications are that these plans will turn to the old tricks of restricted networks and low provider reimbursement levels. This could result in millions of newly insured persons further stressing an overloaded primary care provider network.

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