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.