Obamacare…more unintended consequences

We’ve already explained Obama’s promise that “you can keep your private health insurance if you like it” is pure rubbish.  But, you say, what if I have insurance provided by my employer?  Surely, I can keep that, can’t I?  For most Americans the answer will be a resounding no.  And here’s why.

Obamacare requires that all employers with 50 or more employees must provide health insurance or pay a fine of $2000 per employee.  Many companies, including AT&T, Caterpillar, John Deere and Verizon, are now figuring out how much money they could save if they just paid the fine.

AT&T, for example, paid $2.4 billion last year to cover medical costs for its 283,000 active employees. If the company dropped its health plan and paid an annual penalty for each uninsured worker, the fines would total almost $600 million. But that would leave AT&T with a tidy profit of $1.8 billion.

Let’s say, however, that AT&T, instead of keeping that profit, decided to spread it equally among all employees in the form of a pay raise.  What would that mean to you if you were employed by AT&T?

Today, the cost of providing insurance is about $8500 per employee.  And, the employee does not pay any income tax on the value of that insurance.  Should AT&T drop their group coverage, and, should they decide to use the savings to increase salaries, each employee would receive approximately $6400 in increased wages.  However, unlike insurance benefits, increased wages are taxable.  When the Bush tax cuts expire at the beginning of 2011, the lowest income tax bracket will rise from 10% to 15%.  So, of the $6400 pay raise you get, approximately $950 will have to be used to pay federal income taxes.  This will leave you with approximately $5450 in your pocket to buy insurance.  Not only will you not be able to afford the type of coverage AT&T provided without digging further into your own pocket, but, the CBO estimates that by 2016, as a result of Obamacare, the yearly premium for health insurance will rise to approximately $15,000 for a family of four.

Of course, no employer would use the entire “savings” on employee wage increases.  So, the  picture becomes even bleaker.  Once again, this administration is encouraging the wrong behavior.  And, as in the past, it’s middle class America that will have to pay for it.

23 replies
  1. winnie888
    winnie888 says:

    I knew it, I knew it, I knew it…But to see it in black & white (and a paler shade of blue) just makes me all the more tweaked than I was before.  They  took a fixable problem (however many millions were uninsured) and created a nightmare by passing a law FULL of loopholes that encourages large corporations to pay a mere $2000 fine/employee rather than offer private insurance as a benefit any longer.   I may as well go kiss my doctor goodbye and thank him for his years of great care, because there's no way on God's green earth I'll be able to afford an office visit when this comes to fruition…

    Is this where I should be saying "Thank you!" to Obama????!!!!!?????

  2. Political Entropy
    Political Entropy says:

    You really can't make this stuff up. On the plus side, the excess profits that AT&T will pull in could mean an improvement in the AT&T UVerse internet and television services!

    The One must be so proud of his BFD.

  3. Tim-in-Alabama
    Tim-in-Alabama says:

    I can't help but think back to Wreaker Pelosi's prescient comments, "We have to pass the bill to find out what's in it." However, while the details (schmetails) might not have been known before the bill was signed into law, the ultimate goal seems plain enough. After companies start dumping their healthcare insurance plans into a taxpayer funded system, some Democrat white knight will announce, "See. Your employers don't care about you. They're dropping your insurance plans because they're greedy. That's why a single payer, government plan is the only health insurance that will truly care for your needs (unless you're old and sick or unborn and inconvenient), and we'll keep our boots on the neck of the last of the greedy private insurance companies until they no longer will take your money to not pay for procedures."

  4. PatRiot
    PatRiot says:

    The lack of forethought, stepping on the rights of the individual and the states, trillion dollar price tag.   The Progressives have had 100 years to get universal health care in place.   And this is the best they can do? 

    Note to liberals – take your party back, these kooks have thrown common sense as well as caution to the wind.

  5. Uconnjim
    Uconnjim says:

    (From NH-Jim)

    SOS, the only thing I can fault in your blog is the CBO's estimate of $15,ooo per family of four by 2016.  I have a family of just three and since January of this year my health insurance rates have catapulted 40% that coincided with the passage of this bad health care reform legislation.  I, now, in the year of our Lord 2010, have the honor of paying $15,680.04 per year for myself, my wife and my daughter.  When this legislation takes place, add us to the list of uninsured.

  6. Dimsdale
    Dimsdale says:

    "Unintended" is the new "mad, headlong, power grab without regard for the consequences", or my favorite, "Damn the Constitution, full speed ahead!"


    As "Heinlein's Razor" states:  Never attribute to malice that which can be adequately explained by stupidity, but don't rule out malice.

  7. Dimsdale
    Dimsdale says:

    SOS: doing the reading and comprehending that legislators don't want to do.


    If you ever run for office, Barb, I will work for you pro bono!   😉

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