The volume of articles extolling the virtues of health reform is quite negligible in proportion to the volume of corresponding pieces dispelling the myths of health reform. A recent installment of the former was an attempt to put a positive spin on the measure by invoking the familiar "put lipstick on the pig" metaphor.
One positive outcome of the bill, it was posited, is that 24 percent of Americans will benefit from this legislation. With nearly 330 million citizens, this equates to about 79 million people. Cue: "Imagine" by John Lennon. Imagine all the people … living in harmony … . Sure, 79 million will benefit, at the expense of the remaining 251 million. I was particularly affected by the fact that 11 percent of Massachusetts' residents will be assisted by the measure. Wait! I thought the Bay State already fixed this problem back in 2006!
Another element of the bill extolled by the swine's makeup artist is the supposed gold mine of sales now made possible. Apparently, CDHPs have an advantage because Democrats now support the concept as a lower cost measure. You see, HSAs are now affordable options that consumers will fully embrace. Huh? My plan's family deductible is $5,000. In 2014, the highest family deductible allowed by law on the bronze plan will be $4,000. Like it or not, my family is scheduled for a rate increase as a result. The supporters of this argument need to articulate more clearly why uninsured people (aka, people who admittedly do not handle finances well) will suddenly turn over a new leaf and ride the CDHP wave.
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Quite possibly the most egregious argument for painting the pig is that brokers and consultants are included in the legislation. No need to worry about income from commissions! Hey, there's an employer mandate after all. Start with small group plans. According to the law, groups under 50 will not be required to provide insurance to employees. States even have the option of increasing that number to 100. No small group mandate equals no small groups. No small groups means no need for a broker.
Now look at large groups. The penalty for failing to provide a group plan is $2,000 per FTE. The average cost for providing insurance greatly exceeds that amount. Hewitt did this arithmetic for AT&T not long ago. AT&T spends $2.4 billion on health care annually. The cost to drop their plan and simply pay the fine is $600 million. By dropping their health insurance plan, AT&T's shareholders would see up to $1.8 billion in additional profits. Now take a look around. How many employers do you know who wouldn't consider the same? What does that mean for broker income streams?
The employer mandate must be at least as much as the cost of insurance for it to be effective. Otherwise, employers will simply drop their plans – emboldened and enabled by the guarantee issue provisions of the individual market. What is not clear is how this farmyard provision can be changed. Does the secretary of HHS have the regulatory authority to do so or is that power vested in the Congress? In any case, this bill is a lot less of a made-up sow and more like a severed equine cranium under the sheets.
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