Pay, Play, or NONE OF THE ABOVE

PAY, PLAY or…

none-of-the-above-428x181

July 3, 2013
N. Scott Borden

The Obama administration shocked the business community yesterday by issuing a one year waiver on the penalty tax (thank you SCOTUS for clarifying this) on employers with over 50 full-time equivalent (FTE) who don’t meet certain ObamaCare mandated health insurance guidelines for employees.  This has been called a shrewd move since this provision is very unpopular and there are 21 Democratic Senate seats up for grabs in next year’s midterm election.  Businesses have been concerned about being forced to purchase health insurance for all full-time employees (Play) or being fined up to $3000 per employee if they don’t (Pay).  But now they have a third option… NONE OF THE ABOVE.

Most employers already offer group health insurance.  They want to make sure their employees can obtain affordable health insurance regardless of any pre-existing conditions.   They typically subsidize the premiums for employees and families.  This is an enormous drain on their time and bottom line.  Many employers are reluctant to hire new employees since every FTE could come with a penalty tax which has stagnated expansion and increased unemployment.  But the Obama administration has inadvertently provided a deficit exploding solution many employers are bound to take advantage of.

By delaying this one piece of ObamaCare while moving forward with the exchanges, employers will be able to choose to drop their group health insurance plans without the fear of paying a penalty tax.  Why should an employer pay for health insurance when the government will subsidize individuals and families on the exchanges that make up to 400% of the poverty level?  That means a family of four can be making $90,000 per year and have the government paying some of the premium instead of the employer.  Why would employers waste countless hours struggling with health insurance decisions when the employees can go to the exchanges and pick their own plan?  And all health insurance plans will be guaranteed issue in 2014, so any pre-existing conditions will be covered.

So once again we have the Law of Unintended Consequences (ObamaCare Edition) playing out right in front of us.  Political expediency says unpopular provisions should be implemented in non-election years.  Experts were predicting a very small number of employers would drop their health insurance and let their employees obtain subsidized health insurance on the exchanges.  Not only will the consequences of this delay tactic be a reduction in penalties taxes, but also an exponential increase in the number of employers that will choose “NONE OF THE ABOVE” next year and allow their employees to obtain government subsidized health insurance.

And where will that money come from?