Curmudgeon's Corner

cur-mud-geon: anyone who hates hypocrisy and pretense and has the temerity to say so; anyone with the habit of pointing out unpleasant facts in an engaging and humorous manner

Intentional or Coincidental Market Disruption?

Healthcare, U.S., Quality of Life, Political, Economy

If, as some indicate, the Affordable Care Act (a/k/a ObamaCare) was designed to encourage employers to move their employees off employer-provided health plans, it seems that is the result being witnessed at least to some degree.

Among the latest employers of note, Target Stores announced yesterday that it was going to end its offering of a health plan to its part-time workforce.  Recall that Staples announced that it would permit part-time employees only 25 hours of work per week so they would not be eligible for health plan participation.  If this trend continues, it could cause other large employers to resort to the same approach in order to remain competitive.

Among the strategies being viewed with interest by employers are the restricting of hours worked and the shifting of employees to external private exchanges thus freeing these employers to end their plan(s); and, in the case of smaller employers, the determination of which would be the lesser of evils is actively considered.  Those employers are consciously calculating the cost of health plan premiums versus the cost of the penalties.  Software in use by employers for human resource purposes is being/has been revised to include modules that permit such analysis.

I am a fee-paid consultant to employers  (when I’m not blogging) and I see all this and more.  I also see the increasingly concerned health insurance agent community trying to determine if it has a future.  Some have decided to hang up their uniforms and get out sooner than they had anticipated.  Others lament the loss of income as they see employers reducing the numbers of those covered or as they actually consider their alternatives including simply ending their health plans for employees.  Those agents that have specialized in the Medicare Advantage and Medicare Supplement marketplace watch as their commissions are reduced.  Many are concerned that the insurers with which they have worked for years may simply remove themselves from this line of business.

ObamaCare has, whether intentionally or coincidentally, caused significant concern for many.  If it was intended, as mentioned above, to move more employees into government run health plans, it is having the desired effect in ever increasing numbers.  Once a sufficient number of employees have been forced into the exchange marketplace, both government-run and private exchanges will control the market.  Insurers with smaller market share will exit the market to avoid the issue of adverse selection since they no longer are able to underwrite and alter premium rates accordingly.  There is even concern on the parts of those insurers that have significant market share since they will become dominated/controlled by their ObamaCare business and will be susceptible to premium rate reductions forced upon them by the government, or by the improper recognition of the high-cost cases they’ve written believing that they’d be reimbursed at higher rates now that the government has admitted it may not be able to make that determination.  A major insurer has indicated in public filings that it could suffer irreparable damage if it is adversely impacted by high cost claimants for which it is not receiving increased payments from the government.

Even as this all unfolds, there is the drip, drip, drip of system concerns that permitted a ‘white hat’ hacker to purloin 70,000 records with four minutes of hacking a couple of days ago.  That possibility could make the Target hacking case look like so many small potatoes.

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