Weekend Wars: Health Care vs. Hiring Practices
It is not easy to make the correlation between health insurance premiums and capital markets. It has, however, become increasingly rational to argue that the gargantuan health insurance industry can often come into conflict with the bottom line maximization of businesses, large and small.
Though it is no longer on the front burner of our news reels, Obamacare will continue to be a debated subject long after it is or is not instituted into practice. At the end of a crazy week, a federal appeals court struck down the requirement in President Barack Obama’s health care overhaul package requiring all Americans to carry health insurance.
The three-judge panel sided with 26 states which sued to block the law, but did not go as far as the lower court which called it unconstitutional. Obviously, the last word on Obamacare is nowhere near being put on the books. It is going to be interesting to see where we go from here.
The angle that has always intrigued me the most from a market related perspective is how will Obamacare effect employment numbers. The latest report showed unemployment as stagnant, which is far from earth shattering news. The aspect none of us can confidently bet on, however, is how much the implied effects of Obamacare are effecting hiring decisions for employers.
Most of my small business owning brethren have been living in fear of the potential effects of Obamacare since the day it passed. I haven't talked to any hiring policy decision makers at large companies, but I am sure quite a bit of work has gone into projecting healthcare overhaul related expenses for them, as well.
Though I have to begrudgingly admit that certain logical aspects of the overhaul have begun making sense to me, I am still more against then for. When you take all the anti-big government rhetoric that I am myself prone to, it really could be an efficient way to relieve the healthcare system of piggy backing. There is even the intriguing notion of healthcare markets, which if executable in reality, could be a bigger boon than energy markets were in the late last century.
I guess more than anything, I am curious if you guys look at the issue of Obamacare any differently now that it is no longer in the media spotlight? Am I right in thinking that health insurance is slowly creeping to the forefront of factors we consider when valuing a company and conversely, that company's approach to how they spend their money on hiring and staffing policies?
The requirement to provide insurance or a subsequent fine is another barrier to entry for many entrepreneurs who's business model require a labor force. Largest trend I've noticed is the consideration towards strict a1099-Misc employee base and subcontracting ALL levels of employment to avoid the insurance provision. Although it is not yet clear based on the language of the law if 1099 are under the same requirements to provide as traditional w2.
All-in-all this potential expense is a barrier to entry for many would be entrepreneurs and door closer for small business owners with low margins and predominately low skilled labor which makes up a very large number of jobs in the US.
I can see hiring practices and individual responsibility for insurance changing significantly over the next several years if current healthcare legislation is upheld, and small business remaining in limbo until all the details are known.
I was actually talking to a friend about this last night. We came to the agreement that a compromise would be possible if we were in congress. Insurance is obviously a terrible idea, and making subsidies for everyone who wouldnt buy it on their own is clearly ridiculous.
We came to the compromise that we could have an individually mandated HSA, with no restrictions on optional "cadillac" insurance options. We never got around to fixing the problem of the people who had preexisting conditions or those who were too poor to pay for their own health care, but I do believe a HSA with a high deductible would be a huge step forward compared with what we have now. This is of course the compromise compared to having a free market, which I think is preferable.
Here is a question I have asked myself, which I think is fundamental: do Americans consider that health care is a fundamental right?
A lot of the client work I do is on projecting HCR and PPACA effect on plan costs. The cost is usually an extra 1-2% a year for clients who are not retaining grandfathered status. Granted a lot of the post-2014 provisions still need to be clarified, but all of our actuarial projections have not shown a significant impact on either the health insurers or plan sponsors.
The exchanges are expected to cost around $2k a month, and middle class people are not going to qualify for any tax breaks on the monthly premiums. I think large employers are going to have to continue to structure health insurance programs as a competitive offering for recruiting and retention.
HC costs are going to continue to rise, and since self-insured employers are on the hook for the claims, we are going to see an increased demand for HSAs and Wellness programs.
Since companies with under 50 full time employees will be exempt from the fine, I don't see how any reform measures are a barrier to the small business creation. The fine for larger companies is still relatively minor and will probably have to be increased by Congress so it has any type of effect.
Americans consider healthcare to be a right, but have no interest in actually paying for it.
My uncle is a 31-year health insurance veteran and a benefits manager at a top health insurance company. He told me at breakfast Saturday morning that Obamacare is causing a meltdown at the companies he's servicing. If it's this hard to handle for large corporations with bureaucratic infrastructures, such as HR, benefits managers, etc., I can't even imagine what's going on with small businesses.
Doesn't this go into service in 2014? Is this an accurate statement?
2013 I believe. But companies have to, ya know, make preparations. They aren't going to show up on January 1, 2013 and start figuring out how to deal with Obamacare. Plus health insurance companies have had to rise rates sharply to cover all the added expenses and fees associated with Obamacare.
Isn't the problem the health insurance companies? They've dramatically raised rates like clockwork over the last 20 years, regardless of Obamacare.
The problem is with state governments not allowing health insurance companies to compete, which the companies like. The states have created mini health insurance monopolies in each state. The Republicans were advocating for greater competition rather than more regulation and bureaucracy. Instead we got Obamacare, which is greater regulation and bureaucracy and, in turn, we've got spiking health insurance rates.
Insurance companies cannot cross state lines in most cases. Government interference at its finest.
I also love how people demonize HMO's as if the government would be any better. State controlled health benefits lead to higher taxes and rationed services. How people cannot understand this is beyond me.
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