The Wall Street Journal is reporting that 30 percent of firms currently offering health coverage to employees will cease doing so upon full implementation of the Affordable Care Act in 2014. The details:
While only 7% of employees will be forced to switch to subsidized-exchange programs, at least 30% of companies say they will “definitely or probably” stop offering employer-sponsored coverage, according to the study published in McKinsey Quarterly.
The survey of 1,300 employers says those who are keenly aware of the health-reform measure probably are more likely to consider an alternative to employer-sponsored plans, with 50% to 60% in this group expected to make a change. It also found that for some, it makes more sense to switch.
“At least 30% of employers would gain economically from dropping coverage, even if they completely compensated employees for the change through other benefit offerings or higher salaries,” the study says.
It goes on to add: “Contrary to what employers assume, more than 85% of employees would remain at their jobs even if their employers stopped offering [employer-sponsored insurance], although about 60% would expect increased compensation.”
So, that's a lot to digest, but here's the logic behind why this is good news for supporters of real reform, whether it is a robust public option or Medicare for all.
1.) Employer-provided group health insurance is the bread and butter of health insurance company profits. They make big money off of these plans -- the only reason they sell insurance to individuals is so that there's not an excuse for the government to enter their so-called "free market" for health insurance.
2.) Employers dropping health insurance will mean big-profit insurers lose the giant accounts that big-profit insurance company employees are rewarded with luxury vacations for securing. (Seriously, click on the preceding link and read Wendell Potter's tales of the rewards provided to insurance company soldiers who secure corporate accounts.)
3.) When employees are "let lose" into the so-called free market, they will start buying policies on the unprofitable individual market in a disorganized, chaotic fashion that won't serve the profits of the big-profit insurers well.
4.) Employees who once had the protections of solid group plans will soon demand the same from their individual policies -- this will force the government to regulate the individual market more aggressively, further disciplining big-profit insurers.
5.) Faced with the reality of buying insurance "on their own" -- in an exchange or not -- Americans will see the horrors of the current system and become more demanding of a public option.
6.) The progression to a Medicare for all system will be hastened.
Of course, other positive externalities to employers dropping coverage include:
1.) Higher wages -- yes, it's easy to be cynical about whether or not employers really will increase wages when they stop paying premiums, but the reality is many honest employers will do the right thing.
2.) An end to "job lock" -- the culture of employer-provided insurance will gradually disappear. This means individuals will make employment decisions based on their aspirations, not their health insurance needs.
All of the above having been said, it's absolutely critical that we keep the pressure on Congress for a robust public option until we arrive at Medicare for all.
The bloodsucking insurance company beasts (like CIGNA, which put President Obama's mother through hell while she was dying from cancer) are already thinking about how best to profit from this new dynamic:
Insurers will have to adapt to new realities and look for ways to keep the policy holders they have, the study says, but that shouldn’t be difficult. “Our research shows that more than 70% of employees would stay with their insurer if it offers a seamless transition and appropriate products. Each payer also must understand how changing employer-benefit strategies will shift the risk profile of its membership and set prices appropriately.
Again, a robust public option is the only thing that will help to prevent the bloodsucking insurance thugs from just trying to take advantage of this new market dynamic in a self-serving way.
The bottom line, though, is that this kind of news is all good for American patients. At worst, patients will have insurance separate from their jobs that no longer keeps them in bondage to tyranical employers. At best, this will set America on the path to real government-provided health insurance sooner than we expected.
Oh, and below the fold, let's not forget a really, really important point.
If we fail to communicate to Americans why employers dropping group plans is, on balance, good for Americans in the long term, the Republicans will demagogue on "employers being forced to drop coverage by evil ObamaCare." As we know from the Republican attempts to defend crappy, inadequate, high-profit fast food restaurant mini-med policies as "real" insurance, the Republicans have no qualms about playing fast and lose with the facts.
Let's not allow them to win this battle here -- anything that disrupts the connection between employers and staying alive (i.e. having health insurance) is good news for progressives.
Let's make sure that we take advantage of every single opportunity that we have to build a more progressive future for American patients. The sick have suffered long enough, indeed.