American Enterprise Institute: The Second and Bigger Wave of Health Insurance Cancellations Estimated at 50 million to 100 million

"A new and independent analysis of ObamaCare warns of a ticking time bomb, predicting a second wave of 50 million to 100 million insurance policy cancellations next fall -- right before the mid-term elections.

The next round of cancellations and premium hikes is expected to hit employees, particularly of small businesses. While the administration has tried to downplay the cancellation notices hitting policyholders on the individual market by noting they represent a relatively small fraction of the population, the swath of people who will be affected by the shakeup in employer-sponsored coverage will be much broader.

An analysis by the American Enterprise Institute, a conservative think tank, shows the administration anticipates half to two-thirds of small businesses would have policies canceled or be compelled to send workers onto the ObamaCare exchanges. They predict up to 100 million small and large business policies could be canceled next year." -  Second wave of health plan cancellations looms, Foxnews.com, 11/20/2013

Link to entire article appears below:

http://www.foxnews.com/politics/2013/11/20/second-wave-health-plan-cancellations-looms/

Upon Further Review of the ACA Delays: the Synthesis of No Employer Mandate, No Employer Verification Mechanism, No Income Verification and the Use of Exchanges.

“That extra cash will subsidize coverage for workers without requiring an employer contribution, at least temporarily. It will make it easier for enrollees to understate their income to get subsidies that are richer — much richer in some cases. And it will enable modest-income families and poor adults who were supposed to be cut off from subsidies to access federal help.


By suspending many of the least popular features for a year or more, ObamaCare's cost is likely to be significantly higher; public support may be temporarily supported as well.


Modest-income families are among those that get the rawest deal from ObamaCare. If a spouse is offered individual coverage by an employer that meets the law's affordability test of 9.5% of household income, then the other spouse and their children are ineligible for exchange subsidies.”


“Under ObamaCare's official rules, such families might be better off financially if they earned less. The law's "family penalty" now won't be a concern for 2014.


Friday's release from the Department of Health and Human Services said that state exchanges may take an applicant's word regarding the availability of affordable employer coverage.


This follows logically from Tuesday's announcement that employer reporting requirements about each worker's access to health insurance would be suspended for 2014. No reporting requirements, no fines.”


“Considering ObamaCare's complex rules that deem unaffordable employer coverage for families "affordable," it's only logical that many families will sign up for subsidies who weren't supposed to be eligible.


Friday's release also gave state exchanges temporary leeway to apply the honor system to enrollees when it comes to reporting their income.


This is key because exchange subsidies can differ greatly for households separated by a few thousand dollars in income. In fact, the lower-earning household might be better off under ObamaCare after factoring in lower taxes, bigger premium subsidies and far-lower deductibles.


For example, a couple earning $30,000 might face a $300 deductible, thanks to cost-sharing subsidies, while one earning $32,000 could face a $3,500 deductible, according to one estimate provided to Kaiser Family Foundation by Towers Watson.”


“The delay of the employer mandate also will at least temporarily smooth over two additional ObamaCare cliffs: the 49-worker firm and the 29-hour workweek.


For employers with 49 full-time-equivalent workers (based on hours worked, not just headcount), the 50th worker for firms that do not carry health coverage would carry a $40,000 penalty.


Firms that do offer coverage which is either too pricey for some workers or not deemed comprehensive enough would owe $3,000 for each full-time worker who gets ObamaCare subsidies. Because the fine is nondeductible, it would equate to $5,000 in deductible wages for a profit-making firm facing a 40% federal and state tax rate.


Because that annual fine would be imposed for a worker clocking 30 hours per week, but not for one who puts in 29 hours, it would equate to a wage hike of $96.15 per hour.


Thus, the 30-hour workweek is likely to last only as long as the employer mandate is delayed.


The Congressional Budget Office has projected that the employer mandate would raise $10 billion in fiscal 2015, starting October 2014. That doesn't include any extra subsidy costs due to the mandate's temporary absence.


House Budget Committee Chairman Paul Ryan, R-Wis., has asked the CBO to recalculate the health law's budget impact as a result of the administration's changes.” - Smoothing ObamaCare's Transition Will Cost Billions, Jed Graham, IBD, 07/08/2013



Upon further review, by not requiring the employer mandate until 01/01/2015 then the “individual coverage by an employer that meets the law's affordability test of 9.5% of household income” is not in play meaning a worker could easily go to the exchange with family in tow and receive a subsidy for himself/herself as well as the remainder of the family by indicating the employee‘s coverage does not meet the affordability test of 9.5%. No mechanism is in place to verify the claim. If the mandate was in effect and the employer did in fact meet the 9.5% mandate and the verification mechanism was in place, then the remainder of the employees family would not qualify for subsidies through the exchange.


If the employee were to fudge in order to maximize a reduction in price for the entire family’s health insurance cost and hence seek out the exchange and maximum subsidy, then increased subsidies occur. The subsidy and potential increase in subsidy is taxpayer funds therefore increasing the need for taxpayer revenue to fund the increased subsidies.


The entire article from Investor’s Business Daily appears in the link below:


http://news.investors.com/070813-662924-obamacare-mandate-income-delays-will-hit-taxpayers.htm?ref=HPLNews&p=2

Upon Further Review: ObamaCare Rhetoric vs. Reality

Employer Sponsored Health-Care: has it always been that way?

"We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical. Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?


The revival of the company store for medicine has less to do with logic than pure chance. It is a wonderful example of how one bad government policy leads to another. During World War II, the government financed much wartime spending by printing money while, at the same time, imposing wage and price controls. The resulting repressed inflation produced shortages of many goods and services, including labor. Firms competing to acquire labor at government-controlled wages started to offer medical care as a fringe benefit. That benefit proved particularly attractive to workers and spread rapidly.


Initially, employers did not report the value of the fringe benefit to the Internal Revenue Service as part of their workers’ wages. It took some time before the IRS realized what was going on. When it did, it issued regulations requiring employers to include the value of medical care as part of reported employees’ wages. By this time, workers had become accustomed to the tax exemption of that particular fringe benefit and made a big fuss. Congress responded by legislating that medical care provided by employers should be tax-exempt". - Milton Friedman from the essay How to Cure Health Care, 07/30/2001, link appears below.


http://www.hoover.org/publications/hoover-digest/article/7298