The New York Times brings up yet another failure of the Affordable Care Act.
Federal and state officials and consumer advocates have grown worried that companies with relatively young, healthy employees may opt out of the regular health insurance market to avoid the minimum coverage standards in President Obama’s sweeping law, a move that could drive up costs for workers at other companies.
And drive up costs paid by the already struggling PCIP program and state exchanges....but hey - the President promised to suspend reality right?
Companies can avoid many standards in the new law by insuring their own employees, rather than signing up with commercial insurers, because Congress did not want to disrupt self-insurance arrangements that were seen as working well for many large employers.
“The new health care law created powerful incentives for smaller employers to self-insure,” said Deborah J. Chollet, a senior fellow at Mathematica Policy Research who has been studying the insurance industry for more than 25 years. “This trend could destabilize small-group insurance markets and erode protections provided by the Affordable Care Act.”
It is not clear how many companies have already self-insured in response to the law or are planning to do so. Federal and state officials do not keep comprehensive statistics on the practice.
Self-insurance was already growing before Mr. Obama signed the law in 2010, making it difficult to know whether the law is responsible for any recent changes. A study by the nonpartisan Employee Benefit Research Institute found that about 59 percent of private sector workers with health coverage were in self-insured plans in 2011, up from 41 percent in 1998.
But experts say the law makes self-insurance more attractive for smaller employers. When companies are self-insured, they assume most of the financial risk of providing health benefits to employees. Instead of paying premiums to insurers, they pay claims filed by employees and health care providers. To avoid huge losses, they often sign up for a special kind of “stop loss” insurance that protects them against very large or unexpected claims, say $50,000 or $100,000 a person.
Such insurance serves as a financial backstop for the employer if, for example, an employee is found to have cancer, needs an organ transplant or has a premature baby requiring intensive care.
In a report to clients last year, SNR Denton, a law firm, wrote, “Faced with mandates to offer richer benefits with less cost-sharing, small and midsize employers in particular are increasingly considering self-insuring.”
Officials from California, Maine, Minnesota, Utah, Washington and other states expressed concern about the potential proliferation of these arrangements at a recent meeting of the National Association of Insurance Commissioners.
And they should be worried - they can already see their costs ballooning.
There is a reason I am pushing hard on this issue - because conservatives across the country warned that this would happen. They read the bill and they knew that this was coming and the President (and his apologists) willfully denied the reality of human nature. They blinded themselves to the common knowledge that business owners would not take it in the shorts as the Obama Administration had hoped. They were so steeped in their rigid ideology, that they simply could not take time to critically think about the consequences of their actions. And now we the working stiffs of America get to pay the cost of their thoughtlessness.
Thanks again guys.