The High Cost of Obamacare

February 5, 2014|Posted in: Blog Posts

Yeah, I got one of those letters too.

My insurance company – which I liked, and which I have had for many years, and which paid the bills which I submitted, and which premium I could afford – told me that because of Obamacare’s requirements, they could no longer insure me or my family on that policy. Since I was not a labor union, or a President, or a Congressman, I wasn’t exempt.

After several days of effort, I finally found replacement insurance on the Colorado Exchange. It’s expensive, covers less, and I can’t keep my doctor (even though I wanted to keep him). And if you think the Obamacarewebsite is hard to navigate, give the Colorado site a try. I had to hire an insurance professional to spend pretty much a full day helping Pam and I get through the maze.

But the highest costs may not be the broken promises, the falsehoods, or even the huge waste of what might otherwise have been days and hours of productive time wasted by millions of Americans. The highest national cost might be measured in lost jobs.

This morning the non-partisan Congressional Budget Office reported its estimate that about 2.5 million Americans will be lost from the workforce in the next 10 years… due solely to Obamacare’s effect on the workplace.

Here’s how it will shape up, it seems: In the past, employers offered group plans, which gave employees better coverage at a lower price, because they could be part of a “group”. That could be part of the compensation package, and was welcomed by many employees. In my businesses, I routinely provided some insurance plans for the employees.

But now, under Obamacare, employers aren’t able to reasonably keep their group policies (my insurance professional friend explained in detail how these plans are now structured by law to be priced out-of-reach for companies).

So, the next steps are obvious. Employers will tell employees that the group plan they used to have is unsustainable at today’s costs, and those employees must now find their insurance elsewhere. Because the insurance was a “benefit” and not part of the paycheck, the employee gets no additional funds to go shopping. Rather, he just loses the group coverage.

When employees go into the exchanges to find insurance, they get sticker shock. They might be able to find a policy which, on its face provides similar coverage for a similar price, they might dig deeply enough to discover that the “deductible” for covered care is unreasonably high. I found a plan that had similar terms to the one I lost, but found the deductible to be in the neighborhood of $15,000 per year. This means I would have to spend $15,000 out of my own pocket, per person, per year, before the insurance company would be responsible to pay even the first dollar in coverage. Nobody I know has a bank account that deep.

So, the employees can no longer afford to stay at a job that no longer provides the insurance group policy as part of the package. The employee quits.

First, the employee suffers because his income is now lost to the family.  Then the business also suffers because that worker no longer provides his services to the company. The objects made by that business (let’s call them “widgets”) are produced at a slower rate.  Fewer widgets now must cost more because of two market forces. The first is that the company needs to stay in business, and to make its bottom-line stay stable, the same income is required to pay all the remaining employees. So, fewer widgets selling for now a higher percentage of the required bottom-line means more expensive widgets.

The second market force is that of supply and demand. If there is a market demand for something, and that thing becomes more scarce, then the price naturally rises.  So, the now-unemployed worker has less money to spend (being unemployed and all), and every widget manufacturer in the nation makes fewer, more expensive widgets. So, that worker has to spend even more money to buy the widget.  And society also suffers because the once-plentiful widgets (at a lower cost) are now more scarce, and cost more.

This market dynamic is moving in a dangerous direction. It means that our economy will not recover as quickly as it otherwise might. It also means that we are going to see significant price inflation in the next couple of years.

We are seeing the most anemic job growth in decades. If we aren’t in a depression, then we need to take a fresh look at that term, because I see the same things my Dad described to me that he saw in the late 1930s.

We need strong, principled, fearless leadership in Washington to reverse this trend. But we know that we have no chance at changing much of that leadership for another three years.  We also know that what happens in Washington spreads to Colorado very quickly. We must flex some political will, and some political muscle, here in Colorado. We need to remind ourselves that we are a State, not a colony. We have the right of self-government.  The tenth amendment to the Constitution built a wall that allows us to protect, to the degree we can, our Colorado way of life, our economy, and our future.

We can’t resist everything that comes out of Washington, but we can resist some of the worst of it! And we can stand against the schemes of those under the golden dome in Denver who want to blur the lines of government, and bring us into a condition where we are all dependent upon big government.  It can begin with healthcare. It can begin with protecting Colorado’s jobs, and our economy.