Monday, January 21, 2013

Are Services in Obamacare Really Free?

I had breakfast with a friend and colleague last week who works for one the largest medical insurance carriers in the nation. (I cannot share his identity or the company he works for; I do not have permission). In his work, he negotiates contracts with employers (from small to very large companies) across the Southeast to provide medical coverage for their employees. He tells me that virtually all of his clients (employers) are taking the next few months to crunch numbers for dozens of various scenarios that will affect the expense side of their ledgers; all in order to prepare for full implementation of healthcare reform (Obamacare) in 2014. The full implementation of Obamacare has large costs that employers will now incur. Now of course – they are not merely tweaking the expense side of their ledgers – they are also tweaking scenarios of how much they will charge their customers for their products and services.

He told me that while a handful of companies (such as Papa John’s Pizza) have openly stated they will have to cut their employees hours as well as reduce staff in order to make the figures work – literally every company is considering the same; and will most likely be forced to do the same to stay in business. He said, and I quote “Just because other employer companies are not openly talking about it; does not mean they are not doing it. They are all doing it.”

What we will certainly see happen is a three-fold effect. 1) Staffs will be reduced (job losses) and others will see their hours cut (this will reduce their incomes). Keep in mind that a provision within Obamacare declares a full-time employee as someone who works 30 or more hours per week. This means employees who work on an hourly rate basis for as much as 40 or more hours per week (not salaried); will see their hours cut. It is certainly possible that salaried staff may be considered for lay-offs as well in order to reduce costs. 2) Companies will be forced to offset some of the healthcare costs by increasing the amount that each employee must pay for their portion of premiums and/or deductibles. 3) Companies will also be forced to increase how much they charge for products and services – these costs ultimately roll down to the consumer.

News-Flash – There is no such thing as any service that is free. Ultimately someone is paying for these costs. Wake-up America!

So far; about 90% of my predictions regarding Obamacare have come true. I am not a clairvoyant; nor am I some type of genius. I am merely a working professional that has had to manage P&L and budgets ranging from $5 million to $25 million per year. This is all simple mathematics that is used in a normal and natural business marketplace. All of which will affect people!

Keep in mind – this part of the issue does not even begin to address whether or not the government will be any better or more efficient at administrating healthcare; if it will actually achieve its stated goals of both reducing the cost of healthcare and improving the quality of care. A majority of the Healthcare professionals I work with; who are the experts, have little to no confidence that it will work. This also does even begin to discuss the issue of how government run programs have been the most ripe for corruption and fraud – to a vastly much higher rate than privately run and administered services.

The Leviathan is growing.

Resources & Links

Will Obamacare cause employers to drop health benefits?

The Employer Mandate

ObamaCare's Costs to the Working Class

How Small Business Owners Get Health Insurance (Kaiser Family Foundation)

What Obamacare Means for Small Employers in 2013

1 comment:

  1. OBAMACARE creates nearshore outsourcing. Enacted in July 2010, The U.S. healthcare reform (“ObamaCare” or the “Patient Protection and Affordable Care Act”) is intended to pressure large and small employers through force and taxation. The end result will show North American companies deciding to send customer support, sales, lead generation and appointment setting jobs offshore or risk going out of business. Many will decide to hire a dedicated bilingual employee who is 100% committed to their project. ESL call center employees in Costa Rica are just as or more effective than transitional in-house staff. In addition, giving the owners the freedom to scale up their offshore staff without getting caught in the Obamacare challenge in 2014.