The Big Mystery - Who's In and Who's Out of Obamacare?

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June 13, 2011

The Big Mystery – Who’s In and Who’s Out of Obamacare?

Summary:

The continued increase in health care costs encourages employers to rethink their health care strategy.  Recently we were approached by a major international company asking us to take a look at their health care offering and help them estimate costs of continuing it under a reformed health care system.  They are seriously considering terminating the program worldwide, and paying the benefit penalty to be assessed by the Federal Government.

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There has been continuing discussion about Obamacare and what the reformed system will look like.  The controversial June 2011 McKinsey article suggests that as many as 30% of employers will definitely or probably stop offering employer sponsored insurance after 2014. This somewhat surprising result is much different than initially suggested by the Administration or other forecasters.  Price Waterhouse Coopers (i.e., PwC) released an article in June suggesting that healthcare will soon become 20% of the GDP.  One thing very clear is that there continues to be significant uncertainty and controversy about today’s health care system and the anticipated cost of it.The continued increase in health care costs encourages employers to rethink their health care strategy.  Recently we were approached by a major international company asking us to take a look at their health care offering and help them estimate costs of continuing it under a reformed health care system.  They are seriously considering terminating the program worldwide, and paying the benefit penalty to be assessed by the Federal Government.  Without transferring this risk to their employees they are questioning their ability to survive financially and compete in the marketplace.  Although the analysis is not complete, they are prepared to end their health benefits to improve their financial outlook even if this results in financial penalties.This type of thinking is unheard of in the recent past, but is becoming more common in today’s marketplace.  What had once become a recruiting tool to attract employees has now become a financial burden jeopardizing the company’s profits.  Who is thinking this way?  Is it the small employer or the large employer? Is it the regional or the multi-national?  What was initially presented as a solution to solving the woes of our healthcare system (i.e., PPACA), is now becoming a turning point or a decision point where radical changes are being considered.

Who will remain?  Who can afford to remain?  Has this been a disguised attempt at creating a nationalized system?  No one seems to know these answers, but clearly this has become time of significant decision making.  The combination of a painful recession, deepening federal and state deficits, continuing increased health care costs, and a general dissatisfaction on several fronts have all led to serious and thoughtful discussion to re-look at how businesses spend their scarce and treasured monies.  This is an interesting time facing all of us.  Stay tuned for more discussion on this topic.

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About the Author

David Axene started Axene Health Partners in 2003 after a successful career at Ernst & Young and Milliman & Robertson. He is an internationally recognized health consultant and is recognized as a strategist and thought leader in the insurance industry.

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