The Impact of the Affordable Care Act (ACA) on Glendale City Employees
Obamacare is secretly a bailout of State and Local Governments. However, before I get into the details, I’ll discuss a little about the “Affordable Care Act” (ACA), aka Obamacare,
The (ACA) is a misnomer. It should have been called what it actually represents, “The Unaffordable Care Act”. Obamacare makes healthy people pay more for insurance in order to subsidize sicker people. It is structured to be totally dependent on the younger generation to purchase heath insurance on the exchanges to carry the older generation who annually incurs most of the health care costs. But it isn’t going to happen. Two-thirds of the uninsured today in America are under the age of 40. (1) And it isn’t because they cannot afford to pay.
Sixty-nine percent of the youth demographic were unaware they were required to get health insurance by January 1, 2014. This is the age group that Obama is hoping will foot the bill for the rest of America. The Congressional Budget Office (CBO), working alongside the Joint Committee on Taxation, on October 2, revised its figure that by 2016 six million people a year would opt to pay the penalty instead of getting coverage, citing legislation passed since 2010 as well as the weaker economic outlook.(2)
The weaker economic outlook is due to Obamacare. 75 Percent Of Jobs Created This Year Were Part-Time Due To Weak Economy, Obamacare Concerns. President Barack Obama’s signature health care law will drive up business costs are behind the wariness about taking on full-time staff. The law, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. (3)
A poll showed that 41 percent of surveyed businesses have frozen hiring as a result of the new law. 19 percent, nearly a fifth of all businesses, laid off staff in order to avoid penalties in the new law.The Gallop poll was taken by 603 owners whose businesses have under $20 million in annual sales. (4) Another 38 percent of the small business owners said they “have pulled back on their plans to grow their business” because of Obamacare (5)
Big employers, including Darden Restaurants Inc., Home Depot Inc. and Trader Joe’s Co., say they will stop offering health insurance to part-time workers, and will direct those employees to the state exchanges. Analysts have long speculated that the launch of the insurance exchanges could prompt some employers to drop health coverage. The Obama administration may have inadvertently opened a window for some companies to drop coverage by imposing a yearlong delay on penalties for employers that don’t offer health insurance. (6)
A report, published May 1, surveyed 71 of the 100 companies in the Fortune 100 list of large corporations. They said that they could save a total of $28.6 billion in 2014 alone if they stopped offering health insurance to their U.S. employees and instead paid the employer mandate penalty. (7)
Under the law, Americans must be insured starting in 2014 or pay a penalty assessed on their tax returns. The law creates new mandates that require insurance plans cover certain essential benefits, in addition to setting a minimum percentage of the health costs a plan must cover. Very low cost, so-called catastrophic plans available in the individual market before the ACA took effect are largely no longer available. (8)
Some of the bare-bones plans are likely to cost more than the minimal-coverage plans on the market now, but that’s because you get much more coverage. The ACA requires insurers to provide a basic level of care (9) Most of us — 58 percent of non-elderly Americans — get health insurance through an employer, and 32 percent get government-sponsored insurance such as Medicare or Medicaid. The U.S. Census Department says about 15 percent of Americans don’t have health insurance and these are the people who should be either buying health insurance on the new exchanges, or getting it through Medicaid in the states that are offering it to more people. (9)
Based on a Manhattan Institute analysis of the Health and Human Services (HHS) numbers, Obamacare will increase underlying insurance rates for younger men by an average of 97 to 99 percent, and for younger women by an average of 55 to 62 percent. (10) In the new system, there are four metal tiers of plans that vary in price from the cheapest, Bronze, that must cover at least 60 percent of all health care costs, to the most expensive, Platinum, that have to cover 90 percent of all costs. (8) A new study from the American Action Forum that looks at healthy 30-year-old men finds that underlying premiums for those individuals will increase by an average of 260 percent. The AAF study compared the least-expensive plans available today to the cheapest plans on the Obamacare exchanges. (11)
In 2014, the penalty will be no more than $285 (annually) per family, or 1% of income, whichever is greater. So if you earn $40,000, you’d pay $400. In 2015, the cap rises to $975, or 2% of income. And by 2016, it reaches $2,085 per family, or 2.5% of income, whichever is greater. The penalty for a single adult would be $95, $325 and $695 during that same time period. (12) That’s a fraction of what insurance will cost for most.
Labor unions are among the key institutions responsible for the passage of Obamacare. But now, unions are waking up to the fact that Obamacare is heavily disruptive to the health benefits of their members. The union leaders are concerned that Obamacare’s employer mandate incentivizessmaller companies to shift their workers to part-time status, below 30 hours per week, because employers are not required to provide health coverage to part-time workers. (13)
Unions are concern that regulations will ‘destroy the very health and wellbeing of its members. Small employers now have a more financially attractive alternative, which is to drop coverage and put people on the exchanges, once the existing collective bargaining agreements are up. That gives workers less reason to join a union; a big part of why working people pay union dues is because unions play a big role in negotiating health benefits. Unlike plans offered on the ACA exchanges, unionized workers will not be eligible for subsidies, because workers with employer-sponsored coverage don’t qualify. In addition, Obamacare’s regulatory changes, expanding the role of government, will drive up the cost of these plans. (13)
What unions are not saying is that Obamacare is providing a lifeline to Cities and Counties.
City and county have incurred enormous liabilities having promised their employees generous pensions in the form of lifetime healthcare benefits; but neglected to pre-fund these healthcare liabilities. This has resulted in unsustainable benefits. As Americans age and health care costs rise, this is becoming a major drain on state and local finances. Unlike pensions, retiree health benefits are usually not legally guaranteed. Obamacare may have provided these public entities with a silver lining. Stressed cities and states will see kicking (other post-employment benefits liabilities) OPEB costs up to the federal government as a politically appealing option because of that legal flexibility. (14)
Based on the foregoing,Local governments may now direct their under-65 retirees to purchase health plans on the ACA exchange. Agencies could offer their employees stipends—to offset the cost of the exchanges—at a much lower rate than paying for the plans themselves. In most cases, the retirees will qualify for federal subsidies to buy such plans.. All told, state and local governments shall be able to shift hundreds of billions of dollars in OPEB to the federal government, saving thousands per retiree. But it will also drive costs upward at the federal level. (14)
Source Reference:
(3) http://www.huffingtonpost.com/2013/08/21/part-time-job-creation_n_3788365.html
(5) http://www.cnbc.com/id/100825782
(6) http://online.wsj.com/article/SB10001424052702304795804579097422592424860.html
(7) http://townhall.com/tipsheet/katiepavlich/2013/03/05/six-million-to-pay-obamacare-penatly-n1526185
(8) http://politicalticker.blogs.cnn.com/2013/10/02/fact-check-premiums-will-go-up/
(9) http://www.nbcnews.com/health/why-bother-other-burning-questions-about-obamacare-8C11284516
