ObamaCare could be disaster for businesses and employees

The fallacy of “business” as big bad corporations has become so pervasive that the toxicity of this horrible lie has grown to historic proportions.

Liberals have created an incoherent, although compelling, battle between “business” and “everyone else.”

The great irony here is that, of course, we rely on businesses essentially every moment of our day. The contacts you’re wearing to read this (and that I’m using to write this), come from a business.

Socks on your feet? Business.

Food you had for lunch? Business.

Business is literally everywhere.

Soon-to-be-former President Obama and his liberal factions in Congress have taken this to an extreme. The unconscionably expensive, invasive, and borderline illegal (if not flat out illegal) health care law is a perfect example.

The goal is an admirable one: make sure everyone can afford to receive the treatment they need.

The means, however, are much less admirable: let’s shove it down everyone’s throat even if it means raising the costs for everyone so we can subsidize a few.

Furthermore, what Congress and our President fail to grasp is that both the health care and insurance industries are among the largest and most critical drivers of our economy, not just for fiscal reasons but because keeping people healthy means keeping them economically productive.

In 2008, as one of the largest industries in 2008, healthcare provided 14.3 million jobs for wage and salary workers according to the Bureau of Labor statistics. Ten of the 20 fastest growing occupations are healthcare related.

Healthcare will generate 3.2 million new wage and salary jobs between 2008 and 2018, more than any other industry, largely in response to rapid growth in the elderly population. Most workers have jobs that require less than four years of college education.

Growth, jobs for the less educated, care for people who need it. Great.

Except ObamaCare is going to raise rates on everyone, drive companies out of business, and make it harder, not easier, for a lot of people to afford their bills.

In trying to keep the health care industry in check, it may actually turn them into a behemoth, by driving other businesses away.

To explain why, let me use an example.

Assume you work at a small company Acme, Inc. with 10 employees and the total cost of the health insurance for each employee is $100 (divided between what the company pays, and what you get taken out of your paycheck). The Health Care Act mandates that the insurance company who sold Acme, Inc. that policy for $100 per person needs to spend at least $85 per person in actual medical benefits. If only $75 is spent, the Insurance company owes Acme Inc. $10 per person.

That’s essentially a tax just for being an insurance provider.

Let’s say in 2009, the employees of Acme, Inc. used the healthcare system to the point where they actually spent about $105 per person, but only had paid $100 per person in premiums. The Insurance Company, who can only make a maximum of 15% profit, will want to raise their rates to about $123.53 ($105/(0.85) to cover for that.

So they go to the insurance commissioner in New York and ask for the equivalent of a 23.53% rate increase, using the calculations above to justify their rate increase. The insurance commissioner then says no, you can only have a 4% raise.

The insurance company lost $5 per Acme employee in 2009.

So in 2010, Acme Inc. is paying $104 per person in insurance premiums, and let’s assume they continue to go to the doctor more often (pretty safe assumption since on average medical costs are rising between 7-9% a year). In 2010, their costs increase 7% from their $105 in 2009 and are now about $112.35).

The insurance company has lost money on this group again, and will want to file a rate increase to try to get Acme to pay $132.18 ($112.35/.85) which is what the insurance company needs to get their 15% profit. So they go to the insurance commissioner and ask for the equivalent of a 27.10% increase (($132.18-$104)/$104).

Again, the insurance commissioner, not wanting to face the publicity of granting that big of a rate increase says no, and only allows a 4% raise. Thus in 2010, the insurance company has lost $112.35-104, or $8.35 per Acme employee.

This cycle continues onward and onward until the insurance company eventually says forget it, it’s not worth losing money every year on these groups and drops the market as a whole. This is what happened in New York.

What are you left with? Insurance companies who want to insure fewer people and fewer companies who can provide insurance.

The only companies who can afford to pay portions of their employee insurance (essentially acting as a private subsidy) are, in an ironic twist, the really big companies.

Same goes for the insurance companies who can afford to take temporary losses banking on people at the companies they insure either getting healthier, or going to the doctor less.

Basically, the government wants to spend money it doesn’t have to provide something that the free market is already providing, only the government wants to make it less affordable for the market to provide it.

What people fail to realize is that the people who are uninsured just don’t pay their health care bills. They still go to hospitals, get treatment, and get better.

Hospitals write off millions, and in some cases, tens of millions of dollars in charity care because the hospitals know they’re just not going to see the money.

That’s why insurance premiums and hospital costs are higher for people who ARE insured. It’s something hospital administrators will readily admit. I had a hospital CFO look me in the face and say essentially, “We have to make up the costs somewhere.”

He meant they have to make it up from you and me. And it’s only going to get worse if ObamaCare stays in place.

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