Employers Can Gain By Dropping Coverage
The House Ways and Means Committee plans to release a report Tuesday that says 71 of the nation’s top companies could save almost $30 billion in 2014 by dropping health insurance coverage for their employees.
The committee surveyed 71 companies in the Fortune 100 and determined they could save more than $28 billion in 2014 alone by dropping insurance coverage and instead paying the $2,000-per-employee penalty. Savings over the following decade could be $422.4 billion.
More on this topic in the Kaiser Health News (gated). HT: Michael Ramlet.
Increasing the fine would discourage employers from dropping coverage. Unfortunately, that’s the “solution” most obvious to the Congress.
Well, it’s all about incentive, isn’t it? We all know that, if this doesn’t change, these large employers will be dropping coverage left and right.
An employee health plans can easily cost $15,000 per family. The employer penalty for not having a health plan is $2,000. The federal government will provide a subsidy of $20,000 in some instances. Depending on the employer, the employer might be $13,000 money ahead to drop coverage. In competitive labor markets, workers could count on employers passing most of the gain on to them in the form of higher wages. Firms that did not drop coverage and send workers to the exchange would be at a competitive disadvantage.
I agree with Anne. Many will drop coverage.