• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • With Obamacare, What Happens in Massachusetts Won’t Stay in Massachusetts

    ObamacareBill130322

    Newscom

    PriceWaterhouseCoopers recently released a study of Massachusetts’s experience with health care reform, claiming that under Obamacare most employers will not reduce or eliminate the health coverage they currently offer. However, there are at least three aspects the study did not directly address, all of which suggest that employers will, in fact, scale back their health insurance offerings:

    1)      Obamacare is a federal program, not confined to one state. The PriceWaterhouseCoopers study equates changes made in one state to a law affecting all 50 states, and assumes that employers around the country will respond in more or less the same ways. However, that assumption falls short. When Massachusetts passed its reforms in 2006, national employers, such as General Motors or Walmart, were not allowed to drop their health plans in Massachusetts alone, while still providing coverage for their workers in the 49 other states. Now, if they so choose, they can shed their employee health benefit obligations in all 50 states, and the workers will be covered under Obamacare.

    2)      Obamacare contains fewer restrictions for employers who want to drop coverage. The Massachusetts legislation—“An Act Providing Access to Affordable, Quality, Accountable Health Care”—included more robust restrictions on accessing insurance subsidies than Obamacare. As Josh Archambault of Massachusetts’s Pioneer Institute writes:

    In the Commonwealth, if an individual is offered employer insurance, they [sic] cannot access the exchange or subsidies, period. The only way around this firewall is for the company to drop coverage altogether, and for employees to go uncovered for six months before they can access subsidized coverage. This is highly unlikely given the industry mix in the state.

    Conversely, under Obamacare, employers can stop offering insurance at any time, and their workers will become immediately eligible for income-based insurance subsidies.

    3)      Obamacare subsidizes more individuals than the Massachusetts plan. While Massachusetts’s law subsidizes health insurance for families with incomes of less than three times the federal poverty level (FPL), Obamacare grants subsidies up to four times the FPL. According to the Census Bureau, in 2011, 133.9 million non-elderly Americans lived in households with incomes less than three times the FPL, but 169.2 million non-elderly Americans lived in households with incomes less than four times the FPL. In other words, more than 35 million more Americans will be eligible for income-based subsidies under Obamacare than if the Massachusetts law were extended nationwide. That fact—that more than three in five Americans will qualify for taxpayer-funded health subsidies based on their income—will only encourage employers to drop health benefits, because the majority of their workers can obtain new federally funded insurance instead.

    The PriceWaterhouseCoopers study also argues that the existing tax benefits provided to highly paid employees—those individuals not eligible for Obamacare subsidies—will encourage firms to keep offering health coverage under Obamacare. However, as economist Doug Holtz-Eakin has argued, if employers restructure their businesses to drop insurance for low-income and middle-income workers, the costs to the federal government will explode.

    The case against the recent PriceWaterhouseCoopers study can best be expressed by a 2011 survey of large employers, which found that nearly half of all employers surveyed were very or somewhat likely to “significantly change/eliminate subsidies for employee medical coverage.”  Which organization happened to sponsor that survey? None other than PriceWaterhouseCoopers.

    Posted in Obamacare, Ongoing Priorities [slideshow_deploy]

    Comments are closed.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×