WMC has the corporate solution to health insurance costs…just drop employees

Two high-level executives at separate Wisconsin Manufacturers and Commerce (WMC) member corporations have informed Badger Democracy of a quiet conspiracy within its membership. According to the executives, WMC is promoting a policy which would have private employers completely drop any employer-paid insurance programs by 2014 – forcing employees into (at the moment) non-existent exchanges in Wisconsin.

Rumors of such an action by employers have been circulating since early 2012.   A May 2012 report from Fox News questioned the ethics, and points out the politics of such an action:

A new survey of Fortune 100 companies finds that the health care overhaul, contrary to the claims of its authors, created some perverse incentives for employers to drop workers from company insurance plans…

“The penalties for the employers who drop coverage are very low, and the subsidies for the workers in the exchanges are very high,” said James Capretta, with the Ethics and Public Policy Center.

If the companies indeed take this step, the move would fly in the face of pledges by the law’s backers, including President Obama, that U.S. workers would not lose their employer-provided health plans.

The Fortune 100 “study” by the partisan Republican House Ways and Means Committee published in May, 2012 ignores the net effect of ACA to control health care costs. Two veteran health economists, David Cutler of Harvard and Karen Davis, president of the Commonwealth Fund, have calculated that over the first decade of Obamacare total spending on health care, in part by employers, will be half a trillion dollars lower than under the status quo.

The  House Ways and Means “study” cites no facts to support these cost increases. It merely cites a survey based on the beliefs of the conservative National Federation of Independent Businesses about what they think the impact of the ACA will be:

Consistent with the findings of this report, a separate survey of benefits and human resources executives managing health care costs shows the vast majority of respondents—about 85 percent—said they expect health care costs to rise in the next five years as a result of the law. 68 percent said they plan to re-evaluate their benefits strategy to offset the law’s impacts.

The report ignores the economic reality of the ACA reported in non-partisan studies (i.e. Cutler/Davis above). Rather, the “study” focuses on rationalizing the action of large employers who would drop any employer-funded health plan. In complete ignorance of the economic consequences of such a cynical, political, and ethically challenged action; the US Chamber of Commerce also sounded a warning:

“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 incents employers to stop offering health care coverage.”

The economic repercussions of such an action would be severe – especially during the current recession. Just what is the cost to employers for health insurance benefits?

The March 2012 report from the Bureau of Labor Statistics breaks it down by the hour. “Employer costs for private industry workers averaged $2.34 per hour worked for insurance benefits (life, health, and disability insurance).” A year of 40 hour work weeks amounts to 2,080 hours per year. The average cost to employers, from BLS data, is $4,596.80. Let’s give corporations the benefit of the doubt – $5,000/year on average for health insurance premiums.

The savings is obvious. The ACA assessment per employee (over 30 employees) for employers who offer no health insurance is $2,000. The average employer would save $3,000/year for each employee (after the first 30) by dumping their health plan, and just paying the assessment.

The cost to the average employee (and the broader economy) would be devastating. A search on the US Government website for health insurance coverage in Wisconsin, based on a similar, employer-provided health plan; show the cost to the employee would be nearly double the cost to the employer. $7,800 in premiums, coupled with a $2,000 deductible…versus $5,000 in cost to the employer.

The following email was sent to WMC spokesman Jim Pugh on Friday AM, September 7:

Hi Jim,

Having spoken recently to a CEO/President of a WMC member corporation in Milwaukee, I was told by this person that WMC is advising its members that to avoid having to comply with the full scope of the Patient ACA in 2014; if the law still is in force, member corporations should drop its employee benefit regarding health insurance. This would force formerly covered employees into the exchange, and more expensive (for them) premiums.

Do you have any comment on this? I will be forwarding any response to the person who gave me the information for a response.
In the absence of a response, I will assume “no comment.”
No reply has been received as of this writing.
The motivation here is simple – ideology and greed. Many corporations (including those led by Badger Democracy sources) are profitable under the current scenario. Indeed, many of the largest are currently paying little to zero in taxes. As medical costs decrease, and the insured pool expands, those costs to the employer will continue to decline (as most non-partisan studies have reported). The motivation and ideology of profit is taking precedence over simple societal, human decency.

Any corporate entity or lobby which participates in this type of activity, which would be ruinous to a broader economy, should be vilified for the cynical ideologue they truly are. Wisconsin Manufacturers and Commerce, The US Chamber of Commerce, and any of its GOP lackeys are showing their true priorities – profit. At any cost.

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