Low-skilled Worked Get Raw Deal Under Obamacare

Townhall.com ^ | May 23, 2013 | Michael Barone

[Kaslin]

Would you like to have a "skinny" health insurance policy? Probably not. But if you're employed by a large company, you may get one, thanks to Obamacare.

That's the conclusion of Wall Street Journal reporters Christopher Weaver and Anna Wilde Mathews. They report that insurance brokers are pitching and selling "low-benefit" policies across the country.

You might be wondering what a "skinny" or "low-benefit" insurance plan is. The terms may vary, but the basic idea is that policies would cover preventive care, a limited number of doctor visits and perhaps generic drugs.

They wouldn't cover things such as surgery, hospital stays or prenatal care. That sounds similar to an auto insurance policy that reimburses you when you change the oil but not when your car gets totaled.

You might ask how Obamacare could encourage the proliferation of such policies. It was sold as a way to provide more coverage for more people, after all.

And people were told they could keep the health insurance they had.

As Weaver and Mathews explain, Obamacare's requirement that insurance policies include "essential" benefits such as mental health services apply only to small businesses with fewer than 50 employees.

But larger employers, they write, "need only cover preventive service, without a lifetime or annual dollar-value limit, in order to avoid the across-the-workforce penalty." Low-benefit plans may cost an employer only $40 to $100 a month per employee. That's less than the $2,000-per-employee penalty for providing no insurance.

"We wouldn't have anticipated that there'd be demand for these type of Band-Aid plans in 2014," the Journal quotes former White House health adviser Robert Kocher. "Our expectation was that employers would offer high-quality insurance."

Oops. It turns out that Friedrich Hayek may have been right when he wrote that central planners would never have enough information to micromanage the economy.

It's probably true that businesses trying to attract and retain high-skill employees for long-term positions have an economic incentive to offer generous and attractive health insurance. Otherwise they'd lose good people to competitors.

But the kind of businesses mentioned in the Journal story -- restaurants, retailers, assisted-living chains -- tend to employ lower-skill workers who typically work there only temporarily.

In a high-unemployment economy they may not need to offer gold-plated health insurance to get the workforce they need.

Such employers would have to pay a $3,000 penalty for each employee who buys insurance on Obamacare's health insurance exchanges. But it seems likely that many workers, especially young ones, would opt not to pay the hefty premiums for that.

The problem here is that Obamacare's architects seem to misunderstand the concept of insurance.

People buy insurance to pay for low-probability, high-cost and undesirable events. It doesn't make sense to hold onto enough cash to replace your house if it burns when you can buy an insurance policy that will cover that unlikely disaster.

But Health and Human Services Secretary Kathleen Sebelius has a different idea of what insurance is.

In response to an American Society of Actuaries report that health insurance premiums would rise 32 percent under Obamacare, she said, "Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus."

Her idea apparently is that insurance should pay for just about every health care procedure.

In her defense, the World War II decision to make the cost of health insurance deductible for employers and nontaxable for employees has moved things in that direction. Many people have come to expect that.

But as the Daily Beast's Megan McArdle commented, "Coverage of routine, predictable services is not insurance at all; it's a spectacularly inefficient prepayment plan."

Some Obamacare architects, including its namesake, want to move toward a single-payer system in which government would pay all health care costs.

Many Obamacare opponents want a bigger role for markets, allowing consumers to choose insurance that covers catastrophes and paying for routine costs with tax-free (and in some cases subsidized) dollars.

But if large numbers of employees are enrolled in "skinny" health insurance plans, as the Wall Street Journal article suggests, Obamacare will have produced an unanticipated outcome no one wants.

People stuck with these policies will have insurance that pays for the equivalent of oil changes (up to six a year!) but not for the equivalent of wrecked car. Just the opposite of real insurance.

[Syntyr]

Errrr ARE NOT subsizing and expensive health care plan...

[ridesthemiles]

Let’s put THE GOVERNMENT in charge of your health care! What could go wrong.”””

Let the OBAMA-LED Government........ fixed it.

[Venturer]

All Insurance companies are under the gun which amazes me when I know they wanted this Obamacare BS.

[Grams A]

I don’t think the insurance agents around the country made Obamacare an issue in 2010, or did I miss that?”

I barely remember what happened yesterday, let alone 2010. LOL. Just way too much going on. My business is involved in health care and the first I can really remember hearing rumblings about things coming down the pike was in mid-2011 but even that was really not much. Noticeable changes started happening in January-March 2012. But I don’t think the awakening began until late in 2012.

I am surprised at the number of people I talk with even now who just haven’t a clue as to how bad it is going to be and think I’m just another crazy old lady.

[zeestephen]

Re: “We must be rid of this horrible law [ObamaCare]”

Good Luck.

We are about to pass immigration Amnesty.

That will create at least 20 million new Democrats.

And government control of ALL our health care.

[stephenjohnbanker]

” So as the article says, business-wise companies like Walmarts who hire low-skill workers have an incentive to just offer prevention bills to full time workers to not get the fine. “

Correct.

[ding_dong_daddy_from_dumas]

Remember O promised that our health insurance costs would go down? Don’t know about you, but mine have gone up. They might have gone up without O-care, but he made a promise, and voters did not hold him to it.

[stephenjohnbanker]

EVERYONE’S has or will go up. It has to, to pay for the handouts.

[sickoflibs]

RE :”Remember O promised that our health insurance costs would go down? Don’t know about you, but mine have gone up. They might have gone up without O-care, but he made a promise, and voters did not hold him to it.”

The polls I have seen many people think Obama-care was overturned or repealed/

Obama never gets held responsible because :
1) He is always out there pitching solutions to solve the Americamn people’s problems, he cares

2) Everything bad is Republicans fault, was Bushes, now Tea Party's, the only one never to blame is Rubio, Obama never blames him for anything.

3) He is brown, not white, not black, but brown. So many immigrants (or kids) see themselves as Obama.

[stephenjohnbanker]

” The polls I have seen many people think Obama-care was overturned or repealed/”

Looks like 40 years of leftist domination of the public schools, has finally won the war.

[sickoflibs]

RE :”Remember O promised that our health insurance costs would go down? Don’t know about you, but mine have gone up. They might have gone up without O-care, but he made a promise, and voters did not hold him to it.”

You may recall that from summer 2009 till early 2010 when this monstrosity passed I was looking for every Obama-care post reading it and growing a HUGE ping list on the subject.

But with all my readings I still learned many things about this bill even months and years later from passage even on FNC or talk radio.

Keep in mind that 2012 was election year, so that was the year that O-care rolled out all the freebees to get O re-elected. The costs were hidden.

Call that Obama Heaven.

2013 is the mid year, that is purgatory.

2014 is the year all the bad costly rationing socialist stuff goes into effect.

2014 is Obama-care hell.

How it is debated is critical, Obama will blame its failure on the GOP>

[sickoflibs]

AHHHH, my editor left for the holiday:

But with all my readings I still learned many things about this bill even months and years later from passage even on from FNC or talk radio.

[sickoflibs]

One more try :

But with all my readings I still learned many things about this bill even months and years later from passage even on stuff I never saw or heard on FNC or talk radio until recently.