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Small companies in Massachusetts canceling health care coverage

So many of us predicted this that no one can say they weren't warned. Unfortunately, though, we will see the same thing happen after ObamaCare is implemented in 2014:

The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state's already-stressed budget.

Since April 1, the date many insurance contracts are renewed for small businesses, the owners of about 90 small companies terminated their insurance plans with Braintree-based broker Jeff Rich and indicated in a follow-up survey that they were relying on publicly-funded insurance for their employees.

In Sandwich, business consultant Bill Fields said he has been hired by small businesses to enroll about 400 workers in state-subsidized care since April, because the company owners said they could no longer afford to provide coverage. Fields said that is by far the largest number he has handled in such a short time.

The article points out that it's the small, independently owned, mom and pop businesses like hair salons, day care centers, restaurants, retail boutiques that have been affected the most:

In New Bedford, the Early Learning Child Care center is now paying $1,500 quarterly in fines to the state, instead of the $30,000 it contributed quarterly toward 13 workers' health insurance premiums. When Executive Director Judy Knox terminated the company's health plan late last year, she asked Fields, the consultant, to help 10 of those workers enroll in Commonwealth Care. The other three went on spouses' plans or were eligible for Medicare.

"We had had, in the three previous years, between 17 and 18 percent increases every year,'' Knox said. "I was so worried about the staff and their coverage, but for most of them, Commonwealth Care seems to be working out very well.'' The state program covers people with incomes up to 300 percent of the federal poverty level.

The cost differential is so enormous who would not drop private health insurance and opt to pay the fine in this instance?

However, as more people enter into state health insurance exchanges, even greater pressure will be placed on private health insurance companies and their customers, as risk pools shrink and costs increase. Inevitably, even more small businesses will be forced to drop private insurance and direct their employees to state care.

Then the cycle will continue to spiral downward.


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Comments (14)

The end result is exactly w... (Below threshold)
GarandFan:

The end result is exactly what the liberals want. Single-payer, government run health care. The same folks who provide safety for you on airlines; the same ones who signed off on Deep Horizon's skirting of existing safety requirements; the same ones who provide different interpretations of the same tax law, depending on who you talk to. Yeah, those people will make your health care decisions.

Unless of course, you're one of the 'elite'.

What GarandFan said.... (Below threshold)
Jay Guevara:

What GarandFan said.

I saw a little side-bar not... (Below threshold)
RicardoVerde:

I saw a little side-bar note a few weeks ago that the one of the proposed solutions to Greece's money problems was to privatize their health care.

I wonder if all of this may... (Below threshold)
Philip:

I wonder if all of this may be ultimately advantageous to the conservative agenda in the long run. One of the great crimes of the 100 year progressive onslaught has been linking health insurance to employment. It's not a good system - for all the obvious reasons. Far better for people to arrange for their own insurance and then direct their own careers as they see fit. If the insurance-employment linkage is broken and ObamaCare is repealed, is this not what we will have?

Far better for peo... (Below threshold)
iwogisdead:
Far better for people to arrange for their own insurance and then direct their own careers as they see fit.

Except for the tax structure--employers can provide health insurance (at reduced rates due to group coverage and volume buying, etc.) and deduct the premiums. Employees get coverage tax-free.

If you want to somehow eliminate insurance as an employment benefit, you have to make premiums paid by individuals tax deductible. In fact, since we seem to want more people insured, make the premiums tax credits.

The Federal Poverty level f... (Below threshold)
jim m:

The Federal Poverty level for 2009 was $10,830 for a single person, 14,570 for a couple and adds $3740 per child. That means that virtually everyone in my field with a college degree would be ineligible.

You have to remember that the cost of living in MA is really high and so therefore are the salaries. I was asked by one of the people in my lab if in Chicago they could get a comparable position for 30. I asked $30,000/year? Sure. No he said he meant $30/hour. I just laughed That's about 50% higher than the prevailing wage for that position in Chicago.

There are a lot of companies that will find it more cost effective to stop offering health benefits and their employees will not qualify for the state program. Those people will just get screwed.

As for people finding their own insurance the risk pools are too small and the costs are too high for most people. Most employers would pocket the majority of the cost savings for not offering health insurance and the government wants to confiscate the rest. The result is that the government has ensured that people will not be able to afford private insurance on their own and they have made it unaffordable for employers too.

Thank you, Mitt Romney.... (Below threshold)

Thank you, Mitt Romney.

"Thank you, Mitt Romney."</... (Below threshold)
jim m:

"Thank you, Mitt Romney."

Which is the reason the GOP must find someone else to run in 2012.

The other thing to remember... (Below threshold)

The other thing to remember is that the fine goes to the state and the premiums go to the ins co. Every person that drops coverage means less $$ for the ins co to invest

"Since April 1</... (Below threshold)
914:


"Since April 1"


How fitting considering the fool who proposed this.

The goal is to put private ... (Below threshold)

The goal is to put private insurance companies out of business. They're off to a good start!

Someone help me stop laughi... (Below threshold)
rich K:

Someone help me stop laughing, Please!!!
BTW, where is jimx and why is he not here arguing that those biz folks should be shipped off to a gulag??

And the Law of Unexpected C... (Below threshold)
JLawson:

And the Law of Unexpected Consequences rears back its ugly head, and strikes deep.

Unexpectedly, of course.

employers can prov... (Below threshold)
employers can provide health insurance (at reduced rates due to group coverage and volume buying, etc.)

As an insurance agent that specializes in small business group insurance, I can assure you that group insurance is always more expensive than individual insurance for people in good health. It does, however, cover more because of state or federal mandates. Things like "mental health", acupuncture, pregnancy as a disease (in groups of 15 or more) and so on. Because many companies bill on a "composite rate" (averaging premium) it does shift the costs of employee contributions to te younger in favor of the older. It also provides for pre-existing coverage after a one year wait, however hat will raise the rates for everyone.




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