From The Motley Fool:
By David Williamson and Max Macaluso | September 27, 2013
This episode of The Motley Fool’s Market Checkup drills down on the hottest headlines and biggest market movers in the health-care sector.
In this video, health-care analysts David Williamson and Max Macaluso discuss one of the potential unintended consequences of Obamacare: the changing dynamics behind employer-sponsored health-care coverage.
Trader Joe’s, the popular privately held supermarket, previously applauded for offering coverage to their part-time employees, is reversing course and, instead of coverage, employees will receive a $500 check. Trader Joe’s argues that the employees will likely be able to find a similar plan at a similar cost on the Affordable Care Act’s freshly minted state-based insurance exchanges.
Of course, the cost is similar if you add in the government subsidies that those low-income employees are likely eligible to receive. As Trader Joe’s was followed by Home Depot, this could be the start of a potentially unintended consequence of Obamacare: shifting the cost of providing health care from employers, to the government.
However, there is a broader trend at work, and that is a chance for businesses to shift from a defined benefit to a defined-contribution model for health care. Walgreen’s is one of several companies, including Time Warner, that are either putting current employees, or retirees, on private exchanges. They will continue to subsidize coverage, but the private exchanges provide a way to control health-care costs.
Investors should watch any retailers or companies with large retiree benefits that can be changed. Health-cost inflation has been a big headwind, not just to government spending, but also to business spending. If management can unload at least part of that expense without too much pushback, it will.
More at the link; emphasis mine. And here’s the video:
The Motley Fool is not a political site at all, and tends to temper their verbiage when making statements which could be viewed as political. But the statement that I italicized, “this could be the start of a potentially unintended consequence of Obamacare: shifting the cost of providing health care from employers, to the government,” made me laugh, and ask, “What makes anyone think that such a consequence was unintended?
Governments are funded by taxes. If the Obaminablecare program is not derailed — and, regrettably, I don’t believe that it will be; I expect the Republicans to cave on the defunding battle — government expenditures will necessarily increase. If the authors are correct — and they are writing about things which are already happening — the government’s expenditures will increase even more, and taxes will have to be raised even more.
And from Investor’s Business Daily:
By Jed Graham, INVESTOR’S BUSINESS DAILY | Posted 09/27/2013 04:29 PM ETFor some individuals and families signing up for ObamaCare, a little fudging can make a big difference in their bank accounts.
In California, for example, a childless married couple stating income of $30,000 would face a $1,000 deductible, $15 per primary care visit and a maximum out-of-pocket cost (after premiums) of $4,500.
But for a couple attesting to $32,000 in income, the deductible would be $3,000, primary care visit $40 and out-of-pocket maximum a hefty $10,400.
Though they are separated by just $2,000 in income, the government might provide the lower-earning family as much as $5,900 more in cost-sharing subsidies to defray deductibles and copays.
More at the link.
Now, it’s not all that easy to cheat on the portions of the Forms 1040, 1040A and 1040EZ that would be used by taxpayers in the lower income ranges. They will have, primarily, Forms W-2 from their employers and perhaps Forms 1099 from banks paying them interest on savings accounts. To understate their income, in the calculation of their Adjusted Gross Income, will require lying about their income on those forms, and that’s an easy way to get caught, but the sheer volume of income tax returns in those ranges make it very probable that man can, and will, sneak through. (If they have any cash income, that would be much easier to hide, by simply not mentioning it.) More, the harder the government looks for such cheaters, the more it will find, and the more burden will be placed on the criminal justice system and welfare, as people who wind up with criminal charges for such lose their jobs.
I have yet to see a single aspect of the Patient Protection and Affordable Care Act that isn’t somehow fouled up.