Employers could save billions by dropping health coverage, House GOP says

The Republican majority on the House Ways and Means Committee says the "Democrats' health care law," otherwise known as health care reform, contains policies that create "perverse financial incentives" for employers to stop offering health insurance to their employees.

The committee majority submitted a report this week to Ways and Means Committee Chairman Dave Camp, R-Mich., in which it detailed information from 71 Fortune 500 companies on the cost and coverage of the health insurance plans.

The committee group concluded that employers could save "an estimated $28.6 billion in 2014 alone by eliminating health insurance coverage for their more than 5.9 million U.S. employees (impacting more than 10.2 million employees and dependents covered by those plans) and instead paying the $2,000 per full-time employee fine created in the Democrats’ health care law.

"From 2014 through 2023, these employers could save an astounding $422.4 billion if they took this action."

Individually, the report stated, these employers could save, on average, $402.3 million ($4,821 per full-time and part-time U.S. employee) – on an after tax basis – in 2014 alone by eliminating their health insurance coverage and instead paying the employer mandate’s $2,000 per full-time employee fine. From 2014 through 2023, the average employer responding to the survey could save $5.9 billion if they dropped coverage in favor of paying the mandate penalty.

The employer mandate, also referred to as "pay or play," require employers with an average of at least 50 full-time employees to offer “affordable” and government-approved health insurance to their employees. Employers with at least 50 full-time workers who do not offer government-approved coverage must pay a per employee penalty if at least one of their full-time employees purchases a qualified health plan through a health insurance exchange and receives a taxpayer-funded premium subsidy for his/her coverage.

The penalty will amount to an annual $2,000 fine for every full-time employee (the calculation exempts the first 30 full-time employees) in 2014. After 2014, this penalty amount would be indexed to the average per capita premium for health insurance in the U.S., as determined by the Secretary of Health and Human Services.

Eighty-four percent of responding employers expect their future health care costs will increase at rates that are greater than those they’ve experienced over the past five years. During this period, according to the report, employers responded that their health insurance costs have increased 5.9 percent, on average, while they expect future health costs will grow 7.6 percent, on average.


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