You will be happy to know that we are now, as of the end of February, up to 1040 waivers from Obamacare, covering some 2.62 million people. And, we have a spiffy new federal agency handling said waivers. The Center for Consumer Information and Insurance Oversight, recently created by the Department of Health and Human Services, will now be granting dispensations from Obamacare, and you can find its home page here.
But, this is what you may not know, and what does not bode well for any employee who now has group insurance through his or her employer.
The primary reason these waivers have been granted is that a very small piece of Obamacare has driven up group premiums dramatically. As of September, 2010, all group policies must provide annual benefits of not less than $750,000 per employee. That figure will rise to $1.25 million in September, 2011, $2 million in September, 2012, and after January, 2014, no annual limits will be permitted.
In order to receive a waiver, an employer must demonstrate that this new requirement will either result in a large premium increase, or that a large number of enrollees would lose access to coverage. As the waivers are only granted for one year, expect to see more companies apply for waivers each year as the higher limits take effect.
Let’s look at the future. If a $750,000 annual benefit limit has caused 1040 employers to prove to the government that their premium increase is large, and, perhaps unaffordable, what will no annual limits do?
I doubt we will ever find out the answer to that question as, beginning in January, 2014, there will be no further waivers granted. Consequently, for most, if not all employers, it will be far less expensive to drop group coverage and simply pay the per employee tax. This will have the effect of dumping tens of millions of people into the newly formed government subsidized insurance exchanges. And, this will be expensive.
The former director of the Congressional Budget Office, Douglas Holtz-Eakin, says that the costs of ObamaCare are set to explode when employers opt to drop coverage and send their workers to the new, federally subsidized health exchanges for coverage. He estimates that this will drive up the cost of the law by $1 trillion or more in the first 10 years. [emphasis supplied]
Whether you believe that insurance policies should have no annual limits or not, the fact of the matter remains that unlimited benefits cost money, and, someone has to pay for that.
But, the real losers here are the employees…first, when they find out what even “subsidized” insurance will cost them compared to what they are paying now, and, second, when they get the tax bill for that additional $1 trillion.