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Why Losing Your Insurance Under Obamacare Could Be a Good Thing


In the “if you like your insurance plan you can keep it” watch, Wegmans grocery chain has eliminated health insurance coverage for its part-time employees. The company has been praised for “voluntarily offer[ing] health insurance to employees who worked 20 hours per week or more.” But no more. Buffalo News reports that the company has discontinued this policy, citing Obamacare as the reason for the change.

Up to now there has been a lot of speculation and anecdotal evidence that the ACA would cause employers to drop coverage, but we are seeing more and more hard evidence that this is actually occurring. The delay of the employer mandate doesn’t seem to have fundamentally changed the calculus that would lead employers to shed insurance.

But wait! Employers dropping insurance is now actually a good thing:

Part-time employees may actually benefit from Wegmans’ decision, according to Brian Murphy, a partner at Lawley Benefits Group, an insurance brokerage firm in Buffalo.

“If you have an employee that qualifies for subsidized coverage, they might be better off going with that than a limited part-time benefit,” Murphy said.

That’s because subsidized coverage can have a lower out-of-pocket cost for the insured employee while also providing better benefits than an employer-paid plan.

“It’s a win-win. The employee gets subsidized coverage, and the employer gets to lower costs,” Murphy said.

The starkness of this seeming turnabout is a little amusing, but it points to a lot of complex issues. Here’s what’s happening. The Obama administration made an ill-advised promise that if you liked your insurance, you could keep it under the new law. They did this because they knew the law wouldn’t get passed without such a promise. At the time, they and all health care experts of both the left and the right knew that keeping employer-based coverage was a mistake. But planning to move people off employer-based insurance into the exchanges would massively increase the public cost of the law by way of increased subsidies. So they said they were keeping employer-based insurance to both reassure the public and deflate the predicted cost of the law, making it easier to sell to Congress.

Now reality has intruded and employers are responding to the incentives in the law by kicking people off insurance and into the exchanges. Whether this was always the intention of the Obama administration is unclear; either way, the Obamacare we are getting is not the Obamacare we debated.

In their zeal to oppose the law, Obamacare opponents have seized on the stories of employers dumping insurance as evidence that the ACA is a bad law with “devastating effects”. Given that employer-based insurance has been a bugaboo of conservative wonks for decades, there is something a little hollow about this criticism. The truth is that less employer-based insurance is a good thing, and if conservatives were being consistent they would offer a least some praise for stories like the Wegmans news, albeit tempered with concerns over the haphazard and disorderly way the ACA is forcing people into the exchanges.

That being said, if the administration basically intended for the law to work this way—thus exposing the promise President Obama made about keeping your insurance as a lie—then it fits into a troubling pattern: the President seems all too willing to use any end-run he can find around democratic and legislative processes to achieve the outcomes he desires. The NSA scandal, the way he handled the delay of the employer mandate, and now this. For a candidate who was such a vocal critic of the imperial presidency, President Obama has shown himself an exceptionally willing and able practitioner of that governing style.

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  • Jim__L

    Is no one else concerned about the fact that government subsidies are going to be extended by this approach?

    Aren’t the entitlements we already have completely unsustainable, even without creating a new subsidy — possibly a huge new one?

    The GOP House should refuse to fund this subsidy. It’s not like the money exists in any case.

    • Corlyss

      Amen. Succinctly put, Jim.

  • Marty Keller

    Indeed, the brushing over the cost question is still the real issue here. That individuals may qualify for “subsidized coverage” begs the question of who pays?–and whether any mechanisms whatsoever exist that would keep the subsidies within reason. (Hard to keep a straight face while typing that last, unfortunately.)

  • Pete

    “It’s a win-win. The employee gets subsidized coverage, and the employer gets to lower costs,” Murphy said.”

    Win-win for everyone but the taxpayer who have to pick the tab.

  • Corlyss

    “Employers dropping insurance is now actually a good thing.”

    This is pure propaganda. If it were any good for people who have health care thru their employers, the government wouldn’t have done it. The government cares only about cutting costs of programs their Big Government fans got the nation into 50 years ago and now prove too expensive to sustain. It’s the same deal as when the government switched from the Civil Service Retirement System to the Federal Employee Retirement System. I don’t know any one who was on CSRS and switched to FERS that’s better off.

    Anyone who thinks the feds make a better insurer than their employer-based insurance should look at the health care the feds supply the Native Americans. By law, BY LAW, the feds are required to cover 100% of Native Americans health care. In actuality, the feds cover only 40%. Why? Because year after year Congress refuses to fund more than 40%.

    I’ve suggested here before that the ultimate aim for Obamacare was to destroy private insurance companies, to force everyone off of other 3rd party insurance, and thus to make the government program the only game in town. At which point cost will become the only, ONLY, consideration in how much the feds pay. It may take years to work out to that point, but once these programs start, they can never be substantially modified, never mind reduced or eliminated. If you don’t believe me, look at the Doc fix, $500,000,000 that was supposed to be eliminated to help pay for Obamacare, and it ain’t happened yet and it ain’t ever gonna happen.

  • MarkE

    The Obamacare singularity is approaching even faster than expected. Eventually anyone who can purchase medical treatment outside the system, perhaps even on the black market, will purchase it outside the system. Since there seems to be no way to escape the destructive gravitational pull of these giant government programs, the reductio ad absurdum must occur before we can develop reasonable long term way of delivering and paying for medical care.

  • ljgude

    Put me on the unintended consequences side of the argument about whether the administration set this up on purpose. They are not the German General Staff, but amateurish ideologues. They are making it up as they go along and may not even yet have discovered that they have built a dream castle on top of the sink hole of a health care system that already costs about twice as much as in other countries that actually have slightly better health outcomes. There is nothing the matter with American medicine except the fact that it is financially inefficient. Fools.

  • circleglider

    It’s all part and parcel of the Blue (i.e., Progressive) worldview:

    Government is always the lowest cost service provider because it can eliminate the expenses of profit and competition (and unnecessarily high executive compensation). And because the returns to scale are always positive, centralized economic planning not only works but is always more efficient than “the market.” So even if Obamacare becomes vastly more expensive than originally envisioned, total national healthcare spending will be lower. And the distribution of services will be fairer.

    Never mind that all of this is fantasy…

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