In a new report prepared for the House of Representatives Ways and Means Committee,
data from United States Fortune 100 companies show that they could save significant
amounts under the new health care law by simply terminating health insurance
for their workers and putting those employees into taxpayer-funded health care
The report studied the effect within the health care law of the ‘employer
mandate’ – a requirement that businesses with more than 50 full-time
equivalent employees offer “affordable” health insurance to their
employees or pay a fine beginning in 2014. It noted that, because the cost of
paying the mandate penalty is far cheaper than the cost of providing health
insurance, “employers will face a stark economic choice".
Within the report prepared by the Committee’s Majority Staff for its
Chairman Dave Camp (R - Michigan), more than 70% of those companies detailed
their health care costs, providing the Committee with the means to analyze how
those costs would compare to ending employer-sponsored insurance and paying
the employer mandate penalty.
Based on an aggregation of the data received, if the companies that replied
to the survey ceased to offer health care coverage for their more than 5.9m
US employees (impacting more than 10.2m employees and dependants covered by
those plans) and paid the USD2,000 employer mandate penalty, they could save
a total of USD28.6bn in 2014 (an average saving of over USD400m per
From 2014 through 2023, those employers could save an astounding USD422.4bn
if they took this action (an average saving of nearly USD6bn per company).
Despite the Administration’s promises that the law would control health
care costs, employers have overwhelmingly concluded that increases in cost will accelerate
in the years after the health care law is fully implemented.
84% of responding employers expected that their future health care costs will increase
at rates that are greater than those they have experienced over the past five
years. During this period, employers responded that their health insurance costs
have increased by 5.9% on average, while they expect average future health costs
will grow by 7.6%.
“The findings of the report, along with existing research, show that
the Democrats’ health care law threatens the stability and sustainability
of the employer-based health insurance system,” said Camp. “Anyone
who gets insurance through their job should be worried about what will happen
next, because there is a distinct financial incentive for employers to terminate
health care coverage."
“It is clear to me that because of this law Americans
will not be able to keep the health care plan they have and like,” he cautioned.
The report repeated a warning from the US Chamber of Commerce that, “despite
promises that the health reform law would build on the existing employer sponsored
system, the (employer) mandate will in fact undermine it. It will be more affordable
for employers to pay the penalty for not offering coverage than to offer coverage
itself. And so, ironically, the employer mandate incentivizes employers to stop
offering health care coverage.”