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Keep Your Health Plan -- Don't Count On It

The opinions expressed by columnists are their own and do not necessarily represent the views of

In June 2009, as he fought to pass the Democrats' national health care bill, President Obama made a clear, unequivocal pledge.

"No matter how we reform health care, we will keep this promise to the American people," Obama said. "If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you'll be able to keep your health care plan, period. No one will take it away, no matter what."


Spoken with great confidence, Obama's words were meant to reassure, and it's possible many Americans believed them. But at the same time, the president and his Democratic allies in Congress built the new health care law on provisions that, when acting together, guarantee that some people -- perhaps many people -- won't be able to keep their health care plans.

On the one hand, the new law orders the establishment of health care "exchanges" through which anyone can purchase government-subsidized coverage. On the other hand, the law levies fines on employers who fail to offer coverage to their employees -- but sets the fine far below the cost of coverage. In 2010, the average employer paid $4,150 to cover a single employee and $9,773 for family coverage. (Both figures are about double what they were in 2000.) The new law sets fines at $2,000 for each instance in which an employer doesn't cover its worker.

So when it takes effect in 2014, the law will give employers a choice: Continue to offer increasingly expensive health coverage, or pay a relatively small fine, save a lot of money and let employees buy their own subsidized coverage on the exchange. The incentive seems pretty clear.

Now, it should surprise no one that more and more companies are exploring the possibility of dropping their employee health coverage in 2014. A new study from the benefits-consulting firm Towers Watson finds that nearly 10 percent of midsize to large companies are seriously considering doing just that, and another 20 percent are thinking about it. Still others don't know.


"Many are uncertain how they will respond to the looming impact of state-based insurance exchanges in 2014," says Towers Watson.

How many companies will actually drop their employee coverage? It's impossible to say. But from the latest surveys -- the Towers Watson report is just one of several that have found employers contemplating the move -- it's safe to say that some will, and more could follow.

"I wouldn't expect it to happen overnight," says Paul Fronstin, director of health research at the nonpartisan Employee Benefit Research Institute. "If you look at the movement to managed care, or the movement away from defined benefit pension plans -- none of those things happened overnight. Somebody had to be first, and then it snowballed from there, but it played out over years, not months."

Fronstin says the employer incentive to drop coverage is not quite as clear-cut as it appears. Even in this difficult economy, companies are concerned about the recruitment and retention of good employees. And then there is the fact that companies offer coverage today, with no law to compel them to do it, and no fine to pay if they drop it. Why would they stop in 2014?

Here's the major reason: By that time the exchanges will be up and running, and workers who lose their coverage will be able to buy government-subsidized coverage. Employers who drop workers' coverage won't be throwing them into the cold as would be the case today.

The bottom line is that the new system appears designed to push more and more people into the exchanges, with more and more people receiving health coverage subsidized by the government. For the cynical, it might even appear that is what Obama and his Democratic allies wanted all along. Remember that Obama said during a January 2008 debate, "If I were designing a system from scratch, I would set up a single-payer system."


He couldn't pass a single-payer system, or even a public-option system, even when he had filibuster-proof majorities in Congress. But he could enact a system that will take a slower route in that direction.

It's no surprise that the president isn't now solemnly promising the American people that "if you like your health care plan, you'll be able to keep your health care plan, period." But it seems likely that Americans will hear those words again. Perhaps in 2012 -- in Republican attack ads.

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