ObamaCare Could Wipe Out Over 30% of Private Insurance Plans

Back when ObamaCare was sold to the public, we were told that about 2.5% of businesses with more than 50 employees would choose to avoid providing mandated coverage to their employees, instead paying a $2000 fine and dumping their employees into the government health care “exchanges.”  This projection was a major factor in the absurdly low cost projections of the ObamaCare program – which, believe or not, was once touted as “deficit neutral.”

There have been increasingly alarming signs that far more than 2.5% of businesses would drop their coverage and throw employees into the public exchanges, viewing the $2000 fine as a reasonable ransom to escape from the ObamaCare nightmare. 

Today a USA Today report gives us the latest update on just how wrong those sunny ObamaCare predictions were:

Nearly one in 10 midsize or large employers expects to stop offering health coverage to workers once federal insurance exchanges start in 2014, according to a survey from a large benefits consultant.

Towers Watson also found in a survey completed last month that an additional 20% of companies are unsure about what they will do.

Another big benefits consultant, Mercer, found in a June survey of large and smaller employers that 8% are either “likely” or “very likely” to end health benefits once the exchanges start.

President Obama’s assurances that we could keep our existing plans if we like them ring hollow, when so many of the existing plans are about to disappear.  Also, those ObamaCare cost predictions are going to bend upward a bit, if all those “unsure” companies decide to join the exodus, and the number of people hitting the government exchanges ends up being fifteen times higher than predicted.

If the collapse of private insurance plans is so thorough, the cost of the remaining private plans is likely to rise.  This will produce a lovely death spiral that sends more Americans tumbling into the public exchanges.

Some analysts are taken aback that so many companies are already talking about bailing on ObamaCare:

A large majority of employers in both studies said they expect to continue offering benefits once the exchanges start. But former insurance executive Bob Laszewski said he was surprised that as many as 8% or 9% of companies already say they expect to drop coverage.

Such a move comes with potential payroll-tax headaches and could subject firms to fines. It also would give their employees a steep compensation cut if companies don’t raise pay in exchange for ending coverage.

“Dropping coverage is going to be very difficult for these (companies) to do,” said Laszewski, a consultant who was not involved with the studies.

Some laws are so horrible that “very difficult” paths to avoidance become the path of least resistance.