The implementation of the Patient Protection and Affordable Care Act arrived on Tuesday, October 1. The costs of “ObamaCare” to smaller corporations demonstrates the regressive economic aspects of this new burden.
Unfortunately, this program delivers an unintended financial impact on those who are to be supported in terms both of health care and its costs.
Our company employs 150, of whom 85 elect the company’s health care plan (the others are covered by spousal plans, Medicare or are in the typically 20-30 year olds who chose to go without coverage). The cost of health care is the third largest expense to the company, behind labor and materials.
One provision of ObamaCare is the new penalty tax on insurance companies, designed to penalize these carriers for "excessive profits" on their coverage plans.
This year, our carrier was mandated to rebate $9,800 to our employees under this tax. For our renewal of coverage for 2014, the carrier has included a new line item in our invoice: “Insurance Carrier Tax -- $55,000.”
A second penalty tax in the health care law is the so-called “Cadillac Tax”; the penalty for what the government considers too rich a coverage plan for employees.
The high cost of insurance in New York State assures us that the 40% excise Cadillac Tax will apply to all family plans by 2018.
Were this tax in place today, we estimate that the cost of this provision would be $100,000 on an annual basis. (This Cadillac insurance coverage is not to be confused with the “Rolls-Royce” coverage plan that the Obama dministration and the Congress has reserved for themselves.)
So, the first impact of ObamaCare on our company – one felt before any change to coverage or benefits – would be to increase our company’s health care coverage expense by approximately 15%.
What the government has not bought with taxes/penalties is increased or more affordable health care for employees; and, it has missed an opportunity to vastly increase access to health care and to reduce the costs built into the health care delivery system.
Our competitors, several of whom are internationally-based, do not share these burdens. With multi-tiered pricing, smaller companies will shoulder higher insurance costs when compared with their bigger competitors.
Our customers make purchase decisions based on quality, performance, reliability and price.When the first three of these are equal, the added costs of ObamaCare require that the company reduce its margin or lose the sale.
For reasons of equity in competition, especially in the global marketplace of suppliers, what America needs is improved health care and improved health care coverage, and a reduction to the overall health care cost. In data from 2006, The Commonwealth Fund reported that U.S. health care costs (at 16% of GDP) were more than double that for the 34 member countries of the OECD.
The following should be included in a health care discussion, with the goal of improved and broader coverage at a cost that improves the competiveness of American enterprise in a global economy:
• Enact tort reform and eliminate the largest single health care cost – one that does nothing to improve the quality and delivery of this essential service.
• Rationalize and reduce the regulatory burden to minimize another huge healthcare overhead expense.
• Revisit medical education and the $500,000 to $1 million cost of training a specialist.
• Establish subsidized clinics for people without medical insurance coverage to broaden care without crippling hospital emergency rooms.
• Limit or otherwise restrict medical malpractice law suits. The process of healing requires humans, and humans unfortunately are subject to error – a visit to a doctor or hospital should not be a lottery ticket for the patient or a funding source for attorneys.
• The government should underwrite the liability costs associated with prescription drugs both to reduce drastically their cost and to enable drugs for ‘orphan’ disease to be open for US-delivered pharmaceutical research and patient use.
If this is where we stop on the road towards universal health care, then America has taken a step backward.
If a new or radically modified plan addresses the critical elements listed above, I believe that we can live through this regressive first step – hopefully for not too long.