Losing Your Current Coverage: 10 Million Already Have — More to Follow
Gallup is out this morning with a new survey indicating that employer-based health coverage dropped by nearly a full percentage point among American adults just in the last year. The poll found that 45.0% of Americans reported getting employer health coverage in January through May 2011, down from 45.8% in 2010. Since 2008, employer-based health coverage has declined by a full 4.2 percentage points; given Census estimates of an adult population of about 233 million, that means nearly 10 million adults have lost employer-based coverage since President Obama was elected President, according to the Gallup survey.
Unfortunately, Obamacare’s perverse incentives will only accelerate the slide in employer-based coverage. Sen. Ron Johnson and former CBO Director Doug Holtz-Eakin have an op-ed this morning discussing that very point. Dr. Holtz-Eakin had previously written a paper indicating 35 million more Americans than originally estimated could lose their current coverage – and this morning’s op-ed notes that if half of all Americans end up in Exchanges, the annual cost of Obamacare’s subsidies “would increase by $400 billion by 2021.”
Even Administration officials have acknowledged Obamacare’s incentives to drop coverage; the head of the federal office implementing Exchanges recently mused that employers may say “‘I can now dump my people into the Exchange and it would be good for them, good for me.’” And at a recent hearing, the only defense Secretary Sebelius could give as to why employers will keep offering coverage was a “ban on large employers even considering Exchanges for at least the first five years.” However, the Secretary’s assertion missed a critical point – Section 1312(f)(2)(B) of the statute prohibits employers from converting their employer plans to the Exchange as a group, but there is NOTHING stopping employers from dumping their coverage entirely and letting their workers migrate to the Exchange as individuals.
The bottom line is this: Employers in a struggling economy have already been dropping coverage at a significant rate, as evidenced by the Gallup finding that nearly 10 million American adults have lost their employer coverage since President Obama was elected. Unfortunately, given that Obamacare allows firms to pay a $2,000 fine in lieu of a $15,000 insurance premium, that decline will only accelerate – and federal taxpayers will be much the worse for it.