Posted by: Doug Henwood | February 19, 2013

That’s evade, not drop, though they’ll probably drop too

I wrote that last post when I was in a hurry to get out the door and pick up my kid. I said employers will “drop” coverage when Obamacare takes effect. I should have said they’ll evade the mandate by paying the penalty rather than the insurance premium. Most victims of this evasion don’t have health insurance now, so “drop” is clearly the wrong word for the set of workers that the FT article reported on.

But the original McKinsey survey was about employers who now offer health insurance who are likely to drop coverage when the scheme takes full effect next year. Quoting from my first post on the topic (Bye-bye employer health insurance): “30% of respondents to McKinsey’s survey ‘will definitely or probably stop offering ESI in the years after 2014’—but 50% of those with ‘high awareness of reform’ will do so.” Why? Because when employers without high awareness were informed of the government subsidies available for uncovered workers to buy insurance on the exchanges, they felt a lot better about dropping coverage and paying the penalty instead.

Clearly, if the mandate were to mean anything, the penalty would have to be a lot higher than $2,000. And equally clearly, a lot of costs are going to be shifted onto the government—more, it seems, than the architects of this crazy plan assumed.

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Responses

  1. Thanks for this, Doug. Very interesting points.


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