By Jim Demint
Analysts at the health care consulting firm Truven Health Analytics recently released a “study” that some observers are suggesting could undermine the case that employers will drop health insurance coverage thanks to Obamacare: “‘In no case could there be a win-win for the employer and the employee,’ says Ray Fabius, Truven’s chief medical officer. ‘Someone ends up paying more.’ This is true in all four of the scenarios Truven modeled.”
There’s only one problem with this analysis, and it’s a huge one: At no point does it consider the thousands of dollars of federal insurance subsidies that most workers will be eligible to receive if their firms drop coverage — yet up to 63 percent of non-elderly Americans will be eligible for taxpayer-funded insurance under Obamacare. According to the Census Bureau, there are 266.5 million individuals under age 65. Of those, 169.2 million, or 63.5 percent, have incomes under 400 percent of the federal poverty level — the threshold under which individuals can receive insurance subsidies. Yet at no point in the Truven study did the analysis of net employee costs show that most workers will be subject to some type of federal insurance subsidy to offset the loss of an employer’s health insurance contribution.
This major omission makes the Truven study theoretically interesting, but largely irrelevant. Of course employers are not going to drop coverage — at least not without major employee unrest — if subsidized insurance isn’t available elsewhere. But if the federal government will pick up the tab for most, or perhaps even all, of a firm’s workers’ insurance, why wouldn’t an employer re-structure its benefits package to send its low- and middle-income workers to Exchanges for subsidies, and/or dump health insurance entirely? That’s an inherently logical question that even Truven’s illogical and flawed study can’t deny.