With the announcements over the last couple of weeks of delays in implementation of the employer mandate, the “no doc” verification in the exchanges, and now not having the ability to surcharge smokers, some are saying the Affordable Care Act is falling apart. I don’t agree. I truly believe this was the intent of some from the very beginning. This just brings the end result to the forefront much more quickly. Let’s take a look at each of these items and how they bring about the demise of employer sponsored plans. Remember, it was the Republican’s idea to do away with employer sponsored health insurance in the debates between McCain and Obama back in 2008. It just has taken the current administration a little longer to see the light. So why do away with the employer sponsored coverage? Well, let’s follow the money trail. One of the largest tax expenditures (this is when a tax collection is lost – loopholes) is in employee benefits. These employee benefits cost the treasury billions of dollars each year. In 2008, the largest expenditure was employer contributions for medical insurance premiums and equated to $131 Billion. Do you think the leaders in Congress are looking at this? So by doing away with the employer based system, you in effect increase your tax revenues by that same amount. Pretty attractive if you ask me. Now comes the problem, how do you convince people that they need to give this up? Well, here is how I see it happening. You set up a law that says everyone must have health insurance and tell businesses that they need to provide coverage for their employees. You then say that for the employees, they will not be required to pay more than 9.5% of their income for their coverage. And because some people will not have access to an employer plan, you set up exchanges that promise to not charge people more than 9.5% of their income for the insurance and in many cases much less. It is only fair that if employer coverage is at that amount, everyone else should be also. Once you convince everyone that the exchanges exist for this reason, you then delay the implantation of the employer mandate and leave the doors wide open for everyone to go to the exchanges to get their “free” insurance. Since my employer’s plan charges more than the 9.5% of my income, and the treasury says I am able to choose the amount of income I want to claim, all the working class move to the exchange because the costs are less and benefits are better. Once you have everyone using the exchange, employer provided plans are no longer needed and you easily do away with the tax deduction for these plans. Now that everyone is purchasing their insurance through exchanges, the Government decides to do away with much of the cost and just levies a 9.5% tax to cover your health care and goes to a single payer system. Overly simplistic you say? Take a look at what has transpired so far and tell me that you don’t come to the same conclusion. All the announcements of the last couple of weeks do are shorten the timeline. I hope for the sake of our country we don’t continue in this direction. In the meantime, prepare to write a large quantity of individual business in the next two to three years. Round out your insurance practice to be prepared for the new environment and lastly, don’t worry, be happy.
Is It Falling Apart, Or Just Coming Together
About the Author: Chuck Olson
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