Obama and Dems looking to close Obamacare 'escape hatch' for businesses
Employers have a way to escape many of the taxes and mandates of Obamacare and the Democrats are looking to close the loophole.
Businesses that have self-insurance plans are largely exempt from Obamacare's ruinous mandates. A self insurance plan is simply one where the employer directly funds its medical costs. The company sets aside the cash to cover claims rather than pay insurance premiums.
Obviously, Democrats want to close this large loophole because it puts so many workers beyond their control.
Today, more than 60 percent of workers in large corporations and 80 percent of unions, along with 15 percent of workers in small businesses, are covered by self-insured plans. In fact, most of the 100 million workers now covered by self-insured plans don't even know it. The differences to them are that minimal.
The exemption from many ObamaCare rules will encourage more businesses to shift to self-insurance -- but there's a nationwide drive to stop them.
The White House is leading the charge to close what it calls the "self-insurance loophole" with a laundry list of tactics that were spelled out in a paper published by the hyper-liberal Center for American Progress, titled "The Threat of Self-Insured Plans Among Small Businesses."
They've already had some success: A new California law greatly increases the cost to self-insure. Here in New York, legislation effectively bans companies with fewer than 50 employees from self-insuring.
Republicans (and independent-minded Democrats) in Congress and in the states need to stand firmly against these efforts. It's the best way for businesses -- small, medium and large -- to avoid many of the taxes and mandates that come with ObamaCare.
According to industry research, a typical self-insured group can expect to save more than 10 percent (versus traditional health insurance) without having to sacrifice quality of care. Even uninsured individuals in many states can access self-insurance via trade associations and community groups, instead of having to buy high-cost individual policies through the ObamaCare exchanges.
The administration and its allies fear that the more people gravitate toward the successful, free-market self-insurance approach, the worse their government-engineered health "reform" will look. We're already seeing the beginning of this trend.
That's why the escape hatch is so appealing. Self-insured companies can tailor their health benefits to meet the needs of their workers. They don't have to pay for services their employees neither need nor want. And self-insured plans pay their own medical costs, without having to subsidize the health-care costs of other groups.
The entire rotten edifice of Obamacare rises or falls based on simple numbers; millions have to participate or the program is finished. It remains to be seen just what steps will be taken by the Democrats to thwart the move to self insurance and thus force millions of Americans into insurance plans they don't want with coverages they can't use.
Hat Tip: Ed Lasky