The Dumps

by Dave Schuler on May 28, 2014

Hmmm. I think that James Taranto may be on to something:

Our argument was that the horrors of the exchanges would give workers newfound appreciation for their employer plans, increasing the pressure on both companies and politicians to preserve the existing system. To judge by this story in the New York Times, we were right:

Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day–or $36,500 a year–for each employee who goes into the individual marketplace.

The ruling this month, by the Internal Revenue Service, blocks any wholesale move by employers to dump employees into the exchanges.

The key word here is tax-free: Employers can give raises in lieu of medical insurance, but the former, unlike the latter, are taxable income. “The I.R.S. is going out of its way to keep employers in the group insurance market and to reduce the incentives for them to drop coverage,” Richard Lindquist, president of a benefits software company, tells the Times.

The word that got our attention, though, is dump. It appears in the headline, too: “I.R.S. Bars Employers From Dumping Workers Into Health Exchanges.” If the New York Times were our only source of news, we’d be very confused right now. (Well, OK, we’d be very confused almost always.) For months the Times has been touting the quality of ObamaCare policies, scoffing at those who liked their previous plans and were victimized by President Obama’s fraudulent promise that they could keep them.

Now all of a sudden the exchanges are a garbage dump? Or is it that the exchanges are a pristine wilderness into which workers are the garbage being dumped?

What I think is evolving under the PPACA is that we will become a country in which it is understood that there are tiers of care. At the highest tier are those with employer-provided plans or, for the time being at least, Medicare. The next tier will be occupied with those who are insured under the exchanges and the lowest tier will be Medicaid.

That’s been implicit for a long time but it’s becoming much more explicit now.

{ 12 comments… read them below or add one }

michael reynolds May 28, 2014 at 6:53 am

Dave, I can get Covered California policies that are the equal of the best employer policies. So how is that me being pushed into a lower tier?

The difference is that if I were employed and fired I’d lose all my health insurance under the old system. That was being pushed into a lower tier. In fact, that particular lower tier has ceased to exist because now if I’m fired I can still get coverage through Obamacare.

PD Shaw May 28, 2014 at 8:53 am

@michael, he just gave an example of why employer-sponsored healthcare is better, it is completely tax exempt. The employer’s contribution to coverage is a business expense for the employer, the employee’s contribution is deducted from income.

In contrast, the individual buying on the exchanges is taxed on the income used to purchase a plan. Employers thought they would be able to help equalize the treatment, but they’ve been blocked.

Cstanley May 28, 2014 at 9:12 am

@michael- that particular lower tier hasn’t existed since the 1980s when COBRA coverage was legislated.

... May 28, 2014 at 9:14 am

As long as rich guys get subsidized by the government, the PPACA will be judged a success.

I’ll note that, contra Obama’s promises, our healthcare costs have not gone down by $2,500 since the passage of the PPACA, but have gone up quite a bit, probably at least $1,000 a year, more than that most likely. Quite a difference in outcomes for the poor and the rich, especially given what the President and all his supporters promised..

But it’s just great that a rich liberal living in rich liberal land gets a break. I’m sure he needed it much more than any poor person.

Jimbino May 28, 2014 at 11:49 am

You are wrong about the tiers. The top-tier will be concierge medicine. The next will be medical tourism, where Amerikans who opt out of Obamacare can seek excellent care at a low price in Thailand, India, Hungary, the Czech Republic, Mexico, Brazil, Argentina and Costa Rica.

Dave Schuler May 28, 2014 at 2:06 pm

You may be right about concierge medicine, Jimbino. I don’t know whether the trend is slowing, speeding up, or staying the same.

I’m not as sanguine about medical tourism as you are, Jimbino. I think all it will take is one good catastrophe for the glow to vanish.

steve May 28, 2014 at 4:54 pm

Concierge care will mostly be for PCPs. Procedural care will still be financed by insurance.

Medical care is already by tier, it is just that the lowest tier now is large and represents no care.

“As long as rich guys get subsidized by the government, the PPACA will be judged a success.”

The wealthy were getting subsidized before ACA. Once the Cadillac tax kicks in they will be less subsidized. Most of the subsidization goes to lower incomes in ACA.

Steve

PD Shaw May 28, 2014 at 5:28 pm

@steve, “The wealthy were getting subsidized before ACA.”

True, the subsidy continues. And Obama promised that it would with a horrible bit of demagoguery against McCain’s charachter that insured his enmity. But you always have said the important thing is that everybody be in the same city. And yet you have no criticism for everything that has worked against that.

PD Shaw May 28, 2014 at 8:14 pm

Same city, same system, whatever.

jan May 28, 2014 at 9:56 pm

Both Michael and Steve seem to be standing by and using personal anecdotal experiences as somehow representative of the overall effects of the PPACA for everyone. In doing this they tend to degrade any negative responses or dissatisfaction shown by others, with what has proven to be Obamacare fallacies in their own experiences with Obamacare.

What’s wrong with this picture?

steve May 28, 2014 at 10:43 pm

PD- I have criticized the ACA for that, but I dont harp on it. I dont think it was or is politically feasible. Medicare is a third rail.

jan- I cite data and personal experience. Those often disagree with the (often) unsubtantiated claims you make. Mostly I just point out that it is too early to make most of the claims being made. I guess what is wrong is that does not agree with your view that Obamacare is the worst thing ever (along with everything else he has done.)

Steve

jan May 28, 2014 at 11:36 pm

Steve,

Steve,

I don’t care for the one-sided way Obamacare was created. I dislike all the misinformation and blatant lies that literally helped it cross the finish line of approval — both in Congress and constitutionally. I think it is selectively applied, with advantages for a few and disadvantages for many of the rest. Furthermore, I think it makes no difference as to how it functions anymore, as it is all part of the large governmental trappings, that once they are extruded into place, such laws are set for life.

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