Healthcare Reform Compliance: Will Employers Comply or Stop Offering Health Coverage?

Healthcare Reform Compliance: Will Employers Comply or Stop Offering Health Coverage?
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I’m not debating healthcare reform’s alleged benefits such as lower health costs, increased coverage access, protected doctor and patient relationships and the preservation of seniors’ benefits.

I am debating whether Obamacare moves America closer to the achievement of those goals or further away by placing yet an untenable burden on employers.

Paying Fines Is Cheaper

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Due to the current state of our nation’s economy and the ever-increasing tax burdens and government regulations, a significant number of employers have already decided to play the odds and take a chance on paying a fine rather than investing precious funds into preparations to comply with a law that may be repealed.

Fox News reported recently three out of every ten employers may stop offering any form of health coverage by 2014.1

According to a survey of employers by McKinsey & Company, a range of 30 to 50 percent of the respondents believed “It will be cheaper to pay fines than to provide coverage.”

The McKinsey report also found that employers may opt to offer healthcare benefits at exorbitant premium rates. These plans would be unacceptable under the tenets of the law, but the plan employees would be eligible for government subsidized insurance. The net result is these employers would ending up paying smaller fines and avoid complying with the healthcare reform law.

Obamacare Is a Failure

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As of July 2011, the Health and Human Services (HHS) department had granted almost 1,500 one-year waivers to employers. At the end of the first year, these companies can request a three-year extension.2

Why the need for waivers? Because without a waiver to protect these employers from a least one provision of Obamacare – a ban on annual benefits caps – they might choose to simply stop offering health care benefits to their employees. In the words of Senator John Brasso, ““Each waiver demonstrates that the president’s health care law is a complete failure.”

Every employer who chooses to refuse to offer health care funnels that many more uninsured individuals into the government subsidized insurance pool. “CBO says the cost of giving subsidies to 16 million individuals over Obamacare’s first decade will be $466 billion alone.”

What If?

More Questions

What if Obamacare is repealed? How does the employer recoup the monies spent?

Employers could comply with the letter of the law (assuming they find someone who can interpret it) but discover that amendments to the law change or eliminate the need for compliance. Point of fact: the 1099 requirement has already been repealed. Their only recourse for recouping those expenses is to pass them to their customers (think you and me).

What if states don’t set up their health exchanges?

A July 2011 report in The Hill’s Healthcare blog states that only 10 states have enacted laws to establish insurance exchanges, but these exchanges must be set up and running by 2014 to comply with the law. These states have no financial worries about setting up their exchanges because the law guarantees them almost “unlimited sums” so it’s curious that they are not rushing to comply. Even more interesting is the fact that Oklahoma and Kansas returned their early innovator grants to the federal government.

If states simply refuse to comply and set up the exchanges, the law provides that the federal government will step in to set them up. Many states appear to be taking a “wait-and-see” attitude as the court challenges play out in the judicial system.

Author and martial artist Chuck Norris has said, “There’s a reason the majority of the states in our union — 26, to be exact — have defied Obamacare’s legality and are fighting its enforcement right now.”3

Will employers watch events play out in their home states and wait for judicial decisions before they move ahead with implementation plans? Only time will tell, but if states can avoid compliance, employers may be able to as well.

However, what if the federal government does not have the funds to set up the insurance exchanges? This is a very real possibility according to a report from Politico. Those uninformed politicians forced to find out what was in the bill after they passed it must feel pretty silly now. You see, “A quirk in the Affordable Care Act is that while it gives HHS the authority to create a federal exchange for states that don’t set up their own, it doesn’t actually provide any funding to do so.” Guess who will foot that bill?

I think we all know where the money must come from. Government has no way to raise revenue except by more taxes on an already overburdened tax base.

Looking to the Future

Before the law was passed, there were too many unknowns and uncertainties about it. No one, including the legislators who voted it into existence, really knew what is in the law, how it would be implemented or paid for and what the true final cost would be. Most Americans probably remember Nancy Pelosi’s statement “We have to pass the bill so that you can find out what is in it…” The more we find out, the less we like it.

The outcome of the various court challenges are yet to be seen, and no one knows how the Supreme Court judges will rule when and if the case for the constitutionality of the law appears before them.

If Obamacare is not repealed, experts predict disastrous, expensive results. Even if it is repealed, untold amounts of time and money will have been wasted to rid taxpayers of a punitive law that they clearly told legislators they did not want. Unknown numbers of individuals may lose their health coverage entirely because employers could not or did not comply with the law.

In my opinion, this is probably the worst of any bad political deal to ever be foisted upon America. Every politician who voted for Obamacare should be voted out of office whenever they come up for re-election. Those that are appointed to replace them should be voted out if they do not vigorously pursue Obamacare repeal. The sad thing is that none of this time, effort or money expenditure was necessary.

Tell Us Your Opinion

If you are a company owner or employer, are you making plans to implement Obamacare? If you are an employee, what impact (if any) do you think implementation will have on your life?