Sunday, April 7, 2013

Why Millions Will Lose Their Full Time Jobs Because of Obamacare

Peter Ferrara at Forbes explains:
The Obamacare employer mandate requires all employers of 50 or more full time workers to purchase the expensive insurance for those employees that Kathleen Sebelius (“The Secretary shall determine”) specifies that they must buy.  But that mandate is enforced by a penalty of $2,000 per worker, which may be only 10% of the average cost of family coverage under the Sebelius requirements.
With these kind of numbers, employers will release full time workers and replace them with part time workers, when they can. I have already reported on a college teacher that is going to have her hours cut back to part-time because of Obamacare. It is the clause referenced in the above snippet that is the reason.

How many will lose their full time jobs? Ferrara writes:
Former CBO Director Douglas Holtz-Eakin estimated in a study for the American Action Forum that more than 40 million workers would lose their employer coverage due to these perverse incentives.  It’s going to be even worse than that, when all of the cost increasing impacts of Obamacare are realized.

Here's Ferrara on another Obamacare horror story, premiums are going to soar, especially for youth:
Then there is the benevolent Obamacare regulation called “guaranteed issue.”  That requires all insurers to cover everyone who applies, no matter how sick they are when they first apply, without having ever paid any premiums to the insurer before.  That concept applied to fire insurance would require fire insurers to cover applicants who waited until their home caught on fire to call for coverage.

That regulatory requirement is then paired under Obamacare with the further compassionate regulation called “community rating,” which requires insurers to charge all applicants the same price, no matter how sick when they first apply, except for sharply restricted variances for age, geographic location, and smoking.  Applied to fire insurance, that concept would require the insurer to charge no more for the applicant that calls with his house already on fire than for other applicants.

Naturally, all these regulatory requirements are going to cause health insurance premiums to soar, especially for younger and healthier individuals, who are not going to be happy with Obamacare as a result.  The March 22 Investors Business Daily cites Aetna CEO Mark Bertolini as saying that Obamacare “will likely cause premiums to double for some small businesses and individuals.”

But here is the real takeaway and madness of Obamacare:
Not to worry though. The young and the healthy have a strategy available to them under Obamacare to avoid these costs. They can refuse to buy any insurance until they get sick with some costly illness such as cancer or heart disease (or even just need some costly dental work). Then they can sign up for the full product coverage under Obamacare, taking advantage of the compassionate, benevolent, guaranteed issue and community rating. Until they recover.

The individual mandate, not to mention the employer mandate, was supposed to prevent this. But we discussed the employer mandate above. And individuals as well could just skip the insurance and pay the penalty at a savings of at least 50% to 75% or more. But while Justice Roberts wisely concluded that it is precisely the individual mandate penalty that makes this whole socialist mess constitutional, when our Congressional representatives were put to a vote as to whether the IRS could enforce this penalty by garnishment or seizure, they equally wisely said, “Hell No!”

So millions, including myself, will pursue this strategy next year to avert the costs of Obamacare, which will mean millions more uninsured. And that will mean more costly, sicker and older folks left covered in the insurance pool, which will cause premiums to soar further, which will cause still more individuals and employers to drop coverage, which means still more uninsured, and the chaos of a financial death spiral for private insurers.

(ht Bryan T. Ripp)


  1. Its almost like they wanted to make Health care worse. Not affordable.

    That is my theory. give 5-10 years and they will say "see we tried, now we have to switch to single payer"

  2. My "low" premium (it rises about 10-15% a year), high deductible catastrophic insurance becomes illegal for me starting in 2014. At that point I will be pursuing the strategy above.

    Why pay hundreds of dollars more per month when I can just pay a fine (that may not even be enforced) and get guaranteed coverage if I do get sick?

    It's a no brainer.

  3. It will become a "brainer" when people discover that applying for insurance now takes half a year. By which time if you had a serious acute illness you're ruined.

    Never underestimate the power of bureaucracy to make life miserable.