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01 October 2013

Obama's Affordable Care Act Looking a Bit Unaffordable

In places where the median family income is higher, the number of people who benefit from cost savings will be even lower. It's a tough reality for California, which is home to the largest number of uninsured people in the country (6.7 million) and therefore viewed as the most important test for the success of the new federal health law.

The truth is, Obamacare is doing what it was intended to do: make health care affordable for the nation's lowest earners by spreading out the costs among taxpayers.

The trap is that the exchanges also present a savings for some employers but a rate hike for their employees.

And shifting employees to the exchanges also is just logistically easier than trying to meet the law's employer mandate.

Fifty percent of employers report being "somewhat prepared" to implement the provisions of the ACA, and an additional 22 percent report being "not prepared," according to an August 2013 Deloitte presentation to the National Conference of State Legislatures.

The report also indicates that, overall, 81 percent of employers "do not anticipate dropping coverage." Cheryl Smith, senior practitioner at Deloitte, said that number is likely to change as employers learn more about the exchanges.

"We're not going to know who is coming into the exchanges for the next few years," Smith said. "We also don't know for whom the subsidies will be most enticing."

The Deloitte report found several factors that will feed into employer decisions about dropping coverage. Among them is an assessment of better benefits in an exchange, a penalty for not providing coverage that is less than the cost of that coverage, and a continued trend of premiums rising faster than inflation.

Employers are also likely to join the exchange if they have a great diversity in plan offerings in their market. The study found that 71 percent of small businesses would be more likely to join the exchange in that scenario, compared with 49 percent of large companies.

Of less importance was what competitor companies choose to do with their health benefits, Deloitte found.

"Will the exchange feel the same as receiving health benefits from an employer?" Levitt said. "No. For middle and higher income they would be paying more than they would with a job with health benefits. But it's hypothetical, because they don't have a job with health benefits."

Unless they did, before their employer cut it. 

Perhaps the biggest obstacle Obamacare faces today isn't getting people in the system, but making sure those who do get in actually receive affordable care.

SoRo, I'll say it again:  Health insurance =/= Healthcare.


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