How Many Employers Will Drop Health Coverage Under ObamaCare?


When the CBO estimated how many individuals would end up shifting away from their current employer-sponsored health care coverage under the PPACA, it found that 3 million workers would likely lose their current coverage. But it's increasingly looking like that estimate could be low: A number of big employers are already considering dropping employee coverage, and a new study from former Congressional Budget Office director Douglas Holtz-Eakin and Cameron Smith suggests that, depending on the details of the insurance employers currently offer, the number could be far higher. According to their analysis, the law "provides strong incentives for employers–with the agreement of their employees–to drop employer-sponsored health insurance for as many as 35 million Americans." If that happened, it would raise the bill's cost from about a trillion dollars to an estimated $1.4 over the first decade.

Watch the budget go KABOOM!

Here's the gist: Thanks to a combination extremely generous subsidies extended even to families making comfortable middle incomes and relatively weak employer penalties, it may be cheaper for employers to drop coverage. In addition, the value of the subsidies may be effectively greater for many employees than the coverage they would have gotten through their employers. Liberal supporters of the bill will no doubt say that's exactly the point—to provide more valuable coverage to those in lower and middle incomes.

But as Holtz-Eakin has pointed out previously, the law's deficit assumptions are unrealistic, and total taxpayer cost for all those subsidies is enormous and unsustainable. Even if you buy the deficit-reduction assumptions employed by the bill's advocates—which are dodgy at best—a wave of unexpected employer coverage drops would wipe out any deficit reduction. No matter how you look at it, the PPACA is likely to be a budgetary catastrophe.

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  1. This is the only government program I have ever seen that immediately and in tangible ways makes the lives of millions of people worse. I said it when it was passed and I will say it again. This thing is going to be a political albatross for the Democrats. They now own health care.

    They bastards thought that they could pass this piece of shit and then when thing went bad they could claim, “see nothing works so we need socialized medicine”. But it isn’t going to work that way. Things are going to go bad and no one is going to trust them ever again. The problem was that they didn’t sell it as a last ditch attempt to save the dying capitalist system. They sold it as “Obamacare” and the cure to everyone’s ills. As people lose their health insurance and see their rates go up, they are going to know who to blame.

  2. “When the CBO estimated…..”
    My goodness! A government cost estimate that doesn’t begin to match reality! I guess this’ll make front-page news….

  3. According to their analysis, the law “provides strong incentives for employers?with the agreement of their employees?to drop employer-sponsored health insurance for as many as 35 million Americans.

    Outside of union shops, what does that have to do with anything.

    There is another reason why employers will drop coverage: the benefits mandates in the law will significantly raise the cost of providing insurance. AFAIK, the public companies haven’t yet booked this cost; when they do, I expect it to dwarf the cost they booked earlier this year for losing their prescription deduction.

    Yet another reason: the combination of benefits mandates and premium caps will drive health insurers out of some markets, so third-party health insurance will become increasingly unavailable.

  4. How Many Employers Will Drop Health Coverage Under ObamaCare?

    Way more than predicted by the Democratic authors of this clusterfuck.
    The Dems really need to get slapped around over this. Repeatedly. Either they lied or they’re too damned stupid to govern.

    Barack, Nancy and Harry, take your pick.

    1. Either they lied or they’re too damned stupid to govern.


      1. I was going to say “that’s not an either/or” but Paul beat me to it.

  5. I don’t see any good resolution for this… once the gov’t is directly paying for most healthcare, is there any way to move towards free market healthcare? Is there a precedent for anything like that happening?

    1. A European precedent may not be far off. Granted, not the full monte of privatized medical care but it sure won’t survive in its present state. We’re already seeing some fringe services being excluded from govt coverage (thanks, austerity!). Maybe they’ll split up trauma/life-saving from routine. And voluntary stuff like lasik will have to be done privately. Just a thought.

      1. A European precedent may not be far off. Granted, not the full monte of privatized medical care but it sure won’t survive in its present state.

        That’s the point being made by many here for years even before Obama was president.

        The idea is that the feds would pass something… anything that would “control runaway costs”. Naturally, like MassCare, costs will rise faster than before, causing the reformers to declare that that the only way to truly contain costs, is to go to a full single-payer system.

        We’re going to go to a single-payer system not in spite of the reforms we’re seeing, but because of them.

  6. This is just the beginning, I’m sure. As more people get coverage, there will be more demand for health care putting upward pressure on costs making all the CBO estimates low.

  7. “Liberal supporters of the bill will no doubt say that’s exactly the point?to provide more valuable coverage to those in lower and middle incomes.”

    Um, I thought the point was that 45 million American didn’t have health care, and we needed to do something about it. All this does is shift which health care the ALREADY INSURED have.

    1. WMDs Promoting liberal democracy in the Middle East.

  8. The amount of money that can be spent on health care is practically infinite. Gubermint has no straight forward manner to send price signals, and do discern how to discriminate between liver transplants for convicted rapists, and cancer treatments for 69 year olds.
    Therefore, expect a “NICE” bureacracy to decide that YPLL (years of potential life loss) means that money should be spent on the rapist, and we should toss the old overboard.

    1. I expect the reverse. The AARP has much more power.

      What will happen will be an inability to actually control costs at all, with everyone basically getting everything. The government will response with repeated currency devaluations. Literally until we’ve pretty much destroyed America’s capital base. Investors will flee the sinking ship like rats.

  9. All of them.

    What did I win?

    1. Higher taxes and a shitload of debt 🙁

  10. a wave of unexpected employer coverage

    Isn’t this a silver lining?

  11. I actually think dropping employer coverage is a good thing for all concerned. Employees can self-insure and minimize consumption while the additional income to employees (or corporations) would be taxable.

  12. So, is WWIII going to be a gigantic civil war where people attack each other on a class level instead of country vs country? Because if Greece is any indication, The People do not accept a reduction of free shit without a fight.

    1. True. But no one has explained to me what free shit Obama care is giving away?

      1. It’s still “free shit” if they tax the money out of your paycheck and give you stuff with it. Right?

  13. Guys, all we need is a mandate that employers CANT stop providing coverage. And hey, where’s the Peace, Love, and Harmony mandate? Or my the goddamn unicorn mandate! Wtf Obama, i WANT MY UNICORN!!!!!

    1. They shot unicorns don’t they?

  14. We won’t drop coverage. We did drop BC/BS after a 35% rate hike a few months back, and are now with a different ins. co. with a higher deductible.

    In related news, repeal is now on the table:

    Ron Paul Introduces the Private Option Health Care Act

    With Just Six Words, Ron Paul Can Box in the Republican Establishment in November

  15. That is wonderful. Most of the good proposals severed employers from the provision of medical insurance. If the administration had to lie to get this result past its constituents, so be it.

    It sounds like a lot of people here think its a good thing that employers provide health insurance, when its not. Its better when people buy their own insurance.

  16. $1.4 over the first decade doesn’t seem so bad.

  17. Getting people off employer provided coverage is a good idea. But one can only hope that the subsidies will rapidly be cut.

    1. Hope, Hazel? Look what happened the last time “hope” was (and is) an integral part of policy making.

      Would you like the Brooklyn or Verrazano bridge?

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