They Somehow Did It Again - Another Week, Another Two Obama Care Calamities

Just when you thought there was no way there could be more bad news about Obama Care, another way, or in this post two ways, pop up to prove you wrong. This marks the fourth time out of the past five weeks where we have found it important enough to review the latest research, findings, analyses, conclusions, and bad news about Obama Care, the 2,000 page plus atrocious piece of legislation that was supposed to cure the nation of it skyrocketing health care cost burden.

Two sets of bad news this week. Let's start with a pair of business surveys, as reported by the Associated Press (AP) on August 24, 2011, regarding health care that were recently completed by Towers Watson and benefits consultant, Mercer:

• About one out of every ten midsized and large employers in the country expect to stop offering health care coverage to their employees once the Obama Care insurances exchanges begin operating in 2014.
• Additionally, another one in five companies are unsure about what they will do after the 2014 onset of the insurance exchanges.
• These companies would drop their insurance plans since it would be less expensive to stop offering health insurance to their employees and pay the Obama Care fines then to continue paying for health care insurance under the new tax rules of Obama Care.
• The AP article quotes Paul Fronstin of the Employee Benefit Research Institute: "If one employer does it (drop their employee health care insurance), other are likely to follow. You would see this playing out over the course of years, not months." In other words, if a company's major competitor drops their health care insurance program, than that company is likely to do the same to stay competitive.
• The article discusses the views of Michael Turpin, a national practice leader at broker and consultant USI Insurance services. He claims that one of his clients, a major entertainment industry company, plan to drop their insurance coverage the instance any of their competitors do the same in order to not be at a financial disadvantage, "In those industries...if somebody makes the first move, the others are going to follow like dominoes."
• The industries most likely to drop health care coverage for their employees are those companies in the retail and hospitality area, i.e. the companies mostly likely to employ lower wage, poorer employees.

Another recent survey, conducted by the National Business Group On Health, of 83 companies from the Fortune 500 list found the following results:

• These companies expect their health care insurance costs to rise 7.2% in 2012. The majority of those costs will be passed on to these companies' employees. Thus, Obama Care's early impacts are not reducing the health care cost burden on both companies and individuals as hoped for.
• 27% of the companies surveyed expect to change their insurance limits on preventive services and wellness service components in 2012 as a result of Obama Care. Although not explicitly stated, it can probably be safely assumed that these limit changes for these health services will make the companies' insurance plans less robust and useful to employees.
• 14% of the companies surveyed expect to change their insurance limits on mental health coverage and substance abuse in 2012 as a result of Obama Care. Although not explicitly stated, it can probably be safely assumed that these limit changes for these health services will also make the companies' insurance plans less robust and useful to employees.

More bad news and it keeps on coming. Nowhere have we seen a company, analysis, survey, or industry expert come out and state that Obama care will fulfill its stated objectives:

• Rather than reducing the number of Americans without health care insurance, it is highly likely to result in companies dropping their current health care insurance plans, resulting in millions of more Americans not having health care insurance.
• Rather than reducing costs, there is every indication that Obama Care will increase the cost, or at the very least not impact the rise in health care costs.
• Rather than solving the problem of high health care costs in this country, this legislation has introdced such uncertainty into the market and world that employers are cutting back on hiring and expansion, not knowing what the true impact on their businesses will be.

The Obama administration and the political class has done an absolute abysmal job of explaining what Obama Care's implications are likely to be. As a result, companies and businesses are like a deer in the headlights, trying to figure out how to survive in the uncertainty.

And that uncertainty is likely to increase going forward as this dangerous piece of legislation becomes a major issue in the 2012 Presidential campaign and as it gets closer and closer to review by the Supreme Court. Uncertainty results in conservative business thinking, expansion, and optimism. Is there any surprise that this rise in uncertainty as a result of Obama Care has a very high correlation with the lack of private market job growth over the past year or so? Deer in the headlights do not make for good job creators.

Can it get any worse? Guess we'll find out next week.



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