Employers may elect to simply stop offering health care benefits

No kidding? This is exactly what the Obama administration and their socialist cohorts want. Employers will look at the options, and all of them will slowly come to the realization health care benefits cost money and since the federal government is going to cover everyone, why be involved at all?

From Fox News with my emphasis in bold.

Republicans on the House Ways and Means Committee surveyed the top 100 companies about how much they spent on health care — a total of 71, covering 5.9 million employees, responded. The results suggested it would be far more attractive for companies to drop workers from those plans than keep them.

Even after paying a penalty of $2,000 per employee, the companies stand to save $28.6 billion in 2014 alone by shifting employees to health insurance exchanges governed by strict federal standards. The companies stand to save more than $422 billion over the first 10 years of the law by doing this.

There are a few things you have to understand here…

First, offering health care benefits is a pain in the ass. Companies have teams of employees who spend hundreds and hundreds of hours researching options and working with providers to come up with plans. Then, you have what I’ll refer to as “the employee morale problem” when people bitch and moan about the plans they have to choose from. They compare the plans offered to other employers – or maybe state/federal employees – who only have to pay a $20 co-pay for doctor visits and $25 for a visit to the ER. Even if you offer a good plan, employees still might complain.

Then, if you’re a company that is self-insured, you have to ensure you have cash on hand to pay out claims. Some of those claims can be big money.

Then there is the cost. The rising costs that employees don’t see. When health care costs go up, employers can not just blindly absorb those costs, they are past on with higher prices to consumers, reductions in benefits to employees, and lower pay raises in the future.

But now that the Obama administration in all its wisdom have offered employers an opt-out that will only cost them $2,000 per employee, it’s only a matter of time before one or two pull the trigger. Then, domino effect. Why not off-load all of those issues to the government for two grand?

For those companies who do not hand over the health care administration and costs to the federal government, soon shareholders will demand they do so. You think I’m kidding? If you have two companies with 25,000 employees each that compete in the same industry and one of them pays the fines and saves a couple of million dollars or more, the shareholders of the other company will quickly demand the same.

You think that’s inhumane? Bad business practice? You’re wrong, it’s a solid business practice for this one reason. If you’re a company who elects to keep offering benefits when your competitors do not, their costs will be significantly lower than yours. You’ll be able to stay in business for a little while, but eventually consumers will stop buying from you because your costs are higher.

Think your “humane” efforts will result in customers sticking with you and paying the higher price for your product or service? Sorry Charlie, if the other company provides the same quality and service at a lower cost, you’ll be soon gone from the picture.

That’s the reality.

11 replies
  1. essneff
    essneff says:

    It’s already happening in the state of Dannel P Malloy…… The Hartford Insurance Group?is dropping health coverage for all employees effective 12/31/2013……. this forces?long term?employees, who have pensions to consider, to bail out just to continue the benefits, so this once”great” company can continue to outsource to other countries… the end result….. closer and closer to a socialist single payer system and then, of course a Greece like?bankruptcy!!….. The bottom line is that the rights of the individual?are going to be dead, which is Obama’s?dream????

    • Steve M
      Steve M says:

      This is not true at all. The Hartford is dropping retiree medical coverage for vested employees, they have eliminated future contributions to employee’s cash balance pension plan, and have increased the matching percentage for the 401k plans. To say they are “dropping health coverage for all employees effective 2013” is a total missrepresentation.

      • essneff
        essneff says:

        Steve, you’re right , I got it wrong…… but this seems to me a first step…. say you’re 55 with 30 years at the company, do you think you might get out before the 12/31/2013 deadline to preserve your health insurance? So much for experience, huh???HIG is thinning the herds…… and for?those current employees, yep, you got health coverage?(for now or the next board meeting) right up to when you retire…..??I was not misrepresenting, I made a freaking mistake, perhaps even you have maybe?once in your life

  2. Dimsdale
    Dimsdale says:

    Conversely, some companies might continue to want to attract really good employees with good medical benefits, letting the minimum wage earners etc. be absorbed by the ravages of ?bamacare, creating yet another differential to be exploited by the liberals and their union flunkies.

  3. JBS
    JBS says:

    Hmmmmm, why only $2,000? At the current cost of health care insurance, $2,000 as a fine is a bargain. Why that number? $5,000 would still be a bargain.
    Ahhh, $2,000 is a token number and will only serve to bankrupt the Treasury faster. Those tricky Socialists! For favored contributors, the Regime will waive the fine.
    It is all part of the grand plan, Grasshopper.

  4. Sad4CT
    Sad4CT says:

    I understand that the $2000 fine would cost employers less than what continuing to provide the HC benefits will cost, but if the SCOTUS actually upholds part or all of the HC bill, and the employers actually do this, what will prevent the HHS secretary from raising the fine to #10,000?

  5. just sayin
    just sayin says:

    Come now, doubting Thomas that I am, why would a business reduce the cost of its products?

    Sad4CT (clever name): I think you are on to something. ?First the gvt. lures in the sheeple with the no-brainer of a fine of $2,000. ?Then it exclaims the HC Fund is in the red due to the (yearly) fine being so low with there being SO many people in the system, and the gvt. ups the fine to another arbitrary $10,000. ?How sorry will the businesses be then? ?And the cost of the products? ?Hm-m-m…?

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  1. […] monster of a law is only step one.?Concerning?companies just getting out, I wrote the following about two weeks ago. [O]ffering health care benefits is a?pain in the ass. Companies have teams of employees who spend […]

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