Tuesday, June 7, 2011

If you like your health insurance.......

there's a good chance your employer will dump you in to obamacare.

12 comments:

Patrick_L said...

Luckily I’ve read work from Heritage Foundation and AEI scholars like Stuart Butler and Joe Antos (writings published as recently as 2008), so I know all about the problems with the employer-provided health insurance system. For instance, workers in the exchange system would actually be able to compare and choose between insurance plans (by things like coverage levels), as opposed to now when their employees usually provide them with just one or a handful of options. Yay for better matching conservative principles of increasing consumer choice!

In addition, American firms are ill-suited to fulfilling the roles of financing and managing their employees’ health insurance, a function very different than their core pursuits. The current system creates inefficiencies (since firms are poorly suited for this work) and redundancies (since most firms all perform the same functions to aid their workers receiving health insurance coverage). Firms would no longer have to cope with the unpredictability of future health care cost increases, and could once again base hiring decision on demand for their output and on worker productivity, not on the basis of future health care costs. Employers would save billions because they would no longer need such large human resources departments to manage health benefits and track health contributions, nor would they need to hire consultants to evaluate various insurance options. Yay for conservative principle of increasing American businesses’ economic competitiveness!

The number of plans and insurance companies nationwide would decline, leading to an increase in payer-market leverage- a positive considering the health care market is currently frequently dominated by excessive provider-power that drives up costs while caring little about quality. Yay for improving the health care free market by reducing the distortive impact of government-subsidizing of employer-provided health insurance!

In the current employer-provided system, coverage, or the lack thereof, influences the choice between full-time or part-time employment and the decision whether to work in one company or another. Workers with medical problems currently find themselves locked into jobs, unable to switch to a better job or start their own business because they not give up their current benefits and health insurance for their families. This creates labor market inefficiencies. Worker mobility has been increasing for decades, and it is increasingly economically distortive and health threatening to have health coverage linked to a given job. Employers are less able now to provide working families with continuous, portable health insurance coverage. Oftentimes moving from one job to another forces people to change doctors! (The horror- remember when conservatives deluded themselves into think PPACA would make you change doctors!). Yay for increasing labor market efficiency and national economic competitiveness!

The current tax code is economically distortive in that it most benefits large firms that provide more generous health insurance, and the workers lucky enough to be employed at these firms. Small businesses and lower-income families are also put a great comparative disadvantage with the current tax treatment of employer-provided health insurance coverage. Yay for reducing the tax code’s economic distortions! Another conservative principle!

Patrick_L said...

Employer-provided health insurance is a third-payer insurance model that particularly separates the health care consumer from the costs of their health care, since their employer covers most of the cost (often in unclear ways where workers aren’t fully aware of the tradeoffs being made between wages, benefit levels, and employer-spending on health insurance coverage) and the coverage is additionally subsidized in an unclear and regressive manner by the government. Yay for increasing individual cost-sensitivity and empowering consumers to take control of more of their health care decisions!

Employers (and their insurers) have less of an incentive to manage costs, particularly in certain industries, because of high job mobility that means most workers only work at a given firm for several years. Yay for realigning incentives to lower costs by empowering individuals with choice and increasing sensitivity to cost!

After learning these facts from the research of scholars at Heritage and AEI, I’m less concerned about the weakening of the employer-provided health insurance model. Conservative health care experts have convinced me of the weakness of this old model.

I think this situation is particularly interesting. I think it might even illustrate why conservatives have such antipathy for PPACA. Just several years ago they recognized the American health care system was a mess, and felt the need to provide conservative solutions. Then Obama had to come along and pass PPACA using almost every idea they had ever come up with. That left conservatives and Republicans with three options 1) recognize how PPACA incorporated their ideas and as a result support it 2) reverse course and argue the American health care system was fine and didn’t need a fix; or 3) argue that the PPACA solutions and impacts (previously ones they had advocated) were awful. They chose 2 and 3 (they are honor-bound I assume to oppose anything a Democrat comes up with, since by definition after all it has to be an anti-colonialism, yet also European, form of socialism). Either way, they had to hypocritically take policy positions in contradiction to their previous writings, arguments, ideas, and research. Everything about PPACA is a sign of the second coming. Look at those dreaded “ObamaCare” waivers! Clearly a sign that PPACA isn’t working and Obama’s continued favoritism for Unions and Pelosi allies. (Either that, or a sign of the flexibility of PPACA and the Obama Administration in implementing the law by and accepting that until everything is up-and-running, any health insurance coverage provided by employers, small businesses, and unions is better than no health insurance coverage.)

Intellectual dissonance like this must create stress for conservatives and Republicans, hence their irrationality on the entire subject of health care and “OBAMACARE.”

Patrick_L said...

http://www.washingtonpost.com/blogs/ezra-klein/post/what-if-employers-abandon-the-affordable-care-act/2011/05/19/AGxwSJLH_blog.html

TJE said...

So do you agree with McKinsey's number of 30% Mr. L? How does this square with CBO's 7%?

Patrick_L said...

McKinsey's figure is partly based on problematic business surveys, while CBO's is based on significant economic study and the historical experience in Massachusetts which support CBO's figure. McKinsey's estimates are way overblown.

Patrick_L said...

I'll also add that RAND Corporation, the Urban Institute, the Mercer consulting firm (plus the Massachusetts reform experience) all agree with CBO's analysis- the effects of PPACA on employer-provided health insurance are likely to be quite mild. The law is specifically designed to disincentive firms from doing this, and it ignores the facts that firms provide health insurance to retain quality employees. Most firms and industries that can get away with not providing health insurance to their employees before PPACA was even considered had already dumped health insurance for their employees.

It's also interesting to note while this whole discussion helps conservatives wishing to cast doubt on CBO's projections, it simultaneously stomps on conservative talking points and makes clear that health care in this country is failing because any firms dumping health insurance are doing so because they are desperate to avoid the risks and costs of private health care if they can avoid it. American health care problems aren't Medicare problems, they aren't government problems. They are American health care sector problems affecting everyone, largely as a result of the unique qualities of the health care good making it very difficult for free market principles to improve the situation.

TJE said...

Not sure about your last point PL. For many firms, the decision to dump health insurance may be a simple matter of calculating the costs and benefits of doing so. What happens if the number of firms doing so is much greater CBO's 7%.

Patrick_L said...

If the number of firms dropping coverage is significantly higher, it would be a sign that the American health care system is deterioriating faster, placing greater pressure on PPACA's ability to succeed, moving government support for health care from being done through the tax code to instead being done through the spending side leading to greater Republican attacks on the "size" of government, and resulting in a faster conclusion to the saga that is American health care reform. Political pressure would build faster, and some type of additional radical reform- right or left, would be done. Then we'd see how that worked out.

TJE said...

And those rosy scenarios about how PPACA will reduce budget deficits?

Patrick_L said...

well the increase of people in exchanges (and presumbably receiving subsidies) would be offset by declines in people receiving tax-subsidized employer-sponsored health insurance and increases in revenues from the fees applied to firms that drop health insurance coverage. I don't know enough about how all the parts interact to make a great guess, but I would imagine the significantly higher McKinsey estimates of firms dropping health insurance coverage would have a negative net effect on deficit-reduction. However, I'm not sure it would erase entirely PPACA's deficit reduction (from other PPACA provisions) in the first decade, or potentially later (since PPACA's rate of projected deficit reduction accelerates overtime.)

Patrick_L said...

http://www.washingtonpost.com/blogs/plum-line/post/mckinsey-refuses-white-house-request-for-info-on-study-faulting-affordable-care-act/2011/03/03/AG9gBEPH_blog.html

http://tpmdc.talkingpointsmemo.com/2011/06/multiple-sources-throw-controversial-mckinsey-health-care-study-under-the-bus.php?ref=fpa

Patrick_L said...

http://swampland.time.com/2011/06/08/some-healthy-skepticism-of-the-mckinsey-study-on-employer-insurance/