With Obamacare's main provisions only a few months from full implementation, the law is now moving through the economy like a statutory disruptor beam. It's hard to see how this thing will ever be workable, or affordable.
Many small businesses are trying keep payrolls below 50 workers to remain exempt. Larger firms are trying to figure out how to remain competitive while converting more of the staff to part-timers, for whom insurance need not be provided.
Some who strongly supported the law harbor second thoughts. The Wall Street Journal reports that many union members with plans jointly sponsored by their union and employer have soured on Obamacare. They complain that it will jack up their health plan costs and make them less competitive in the workplace.
Perhaps the biggest unknown is how many employees will lose company-sponsored insurance. A McKinsey survey of employers found that 30 percent would stop offering insurance and pay the $2,000 per-worker penalty.
Consultants at Deloitte expected 9 percent of companies to drop coverage, while Mercer's estimate was 21 percent. The Congressional Budget Office, which provided the official projection of the law's cost, was much lower. If there's an exodus from employer health plans and those workers end up in the Obamacare exchanges, the program's cost will explode.
But the opposite problem also could be disastrous for the law's viability. The dumped workers and many of those now without policies may not go to the exchanges at all, opting instead to pay the penalty, which will be much lower than the cost of a health plan.
If the young and healthy stay away, those left in the exchanges will be older and sicker — pushing premiums higher and driving more people out.
Premium prices in the individual market may be primed to skyrocket anyway. Health care inflation has been relatively well behaved of late, but the Society of Actuaries recently predicted that medical claim costs in the individual markets — the main driver of premium prices — will shoot up an average of 32 percent under Obamacare.
Even many businesses that will continue offering insurance are making major adjustments.
Cary Hall, president of Benefits by Design, an Overland Park, Kan., insurance broker, says he recently conducted a seminar for CEOs of nearly two dozen manufacturing companies. He said none planned to drop company-sponsored insurance, but many are thinking of scrapping off-the-shelf plans from big insurers in favor of becoming self-funded.
Under Obamacare, taxes and fees for fully insured plans are several orders of magnitude higher than for self-funded plans, making the latter option attractive to companies with trained workers who might leave if there's no health insurance.
Looking further into the future, there are a couple of other bombs embedded in the law.
Writing at National Review online, Yuval Levin noted that unless medical costs grow slowly, the Independent Payments Advisory Board will begin cutting payments to Medicare providers, reducing seniors' access to care. The likely result: A senior revolt followed by action in Congress to overturn the IPAB, and a national debt growing even faster.
The second bomb is timed to go off in 2018 — again, if health costs rise too fast. In that year, officials will start cutting subsidies in the exchanges if their cost exceeds 0.5 percent of GDP.
Because of this feature of the law, the CBO says the number of people in the exchanges could fall, leaving behind people with lower incomes or costlier health problems, or both — once again, driving up premium prices and pushing more people out.
President Barack Obama's pitch for the law was that "if you liked your current health plan, you could keep it." He also pledged that premiums in the individual market would be $2,500 lower by the end of his first term.
According to The New York Times, even the White House is now telling officials it's "unwise to tell consumers that they could get 'health insurance that fits your budget.'"
Obamacare is a centralized, industrial-era monstrosity force-fed into a digital economy full of consumers accustomed to individually tailored choices. As this train wreck begins to unfold, watching the political fallout is going to be fascinating.
E. Thomas McClanahan is a member of the Kansas City Star editorial board. Email: firstname.lastname@example.org.
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