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Government "Tweak" May Encourage Employers To Drop Coverage

08/19/11

  05:12:31 pm, by MedBen5   , 256 words,  
Categories: Health Plan Management

Government "Tweak" May Encourage Employers To Drop Coverage

The “will they/won’t they” question of employers offering health coverage once government-run exchanges are in place has been bandied back and force since the Affordable Care Act was passed last year. Study findings have run the gamut from “big employers will continue coverage” to “up to one-half of employers will drop coverage“.

Forbes’ Apothecary Blog spotlights the latest study, this one a working paper by economists Richard Burkhauser, Sean Lyons and Kosali Simon. They examine various reasonable assumptions regarding the behavior of employers under the law – and one possible outcome is troubling, to put it mildly. Blog author Avik Roy explains:

“Burkhauser and colleagues found that, in a worst-case scenario, the number of people covered by Obamacare’s subsidized exchanges could be more than double the estimates of the Congressional Budget Office and the Joint Committee on Taxation [JCT]. ‘In the most dynamic case (broad affordability and maximum change in premiums)…Exchange coverage increases from 10.23…to 22.89 percent’ of the privately-insured workforce. This would lead to worst-case of $48 billion a year in additional federal spending, according to a version of the study published by the Employment Policies Institute.”

What accounts for this potential disparity? Roy breaks it down in detail, but the short answer is a “tweak” used by the JCT to ensure the health care law had a favorable fiscal score – thus improving its odds of passage – will also allow employers to offer government-defined “unaffordable” coverage. This effectively drives employees to the exchanges while imposing only a small fine on the employer.

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