Photo: Reuters/Jonathan Alcorn
From New York Post, By George E. Pataki, 11/06/13 – As ObamaCare continues to crash, smaller businesses and their employees may have an escape hatch from many of the law’s worst features — but the administration and its left-wing allies are trying to close the door.
When Congress passed ObamaCare, Republicans managed to secure important protections for “self-insurance” that now provides a way for businesses to escape the most egregious parts of the law: Self-insured health plans are exempt from many of the taxes and mandates that ObamaCare otherwise imposes on businesses and individuals.
A self-insured health plan is one where the employer directly funds its own medical costs — that is, rather than paying premiums to an insurance carrier to cover its employees, it sets aside the cash to cover anticipated expenses. (The business often hires an insurance company to manage employees’ claims, but the insurer isn’t actually selling insurance, just its claims-processing services).
Today, more than 60 percent of workers in large corporations and 80 percent of unions, along with 15 percent of workers in small businesses, are covered by self-insured plans. In fact, most of the 100 million workers now covered by self-insured plans don’t even know it. The differences to them are that minimal.
The exemption from many ObamaCare rules will encourage more businesses to shift to self-insurance — but there’s a nationwide drive to stop them.
The White House is leading the charge to close what it calls the “self-insurance loophole” with a laundry list of tactics that were spelled out in a paper published by the hyper-liberal Center for American Progress, titled “The Threat of Self-Insured Plans Among Small Businesses.”
They’ve already had some success: A new California law greatly increases the cost to self-insure. Here in New York, legislation effectively bans companies with fewer than 50 employees from self-insuring.
Republicans (and independent-minded Democrats) in Congress and in the states need to stand firmly against these efforts. It’s the best way for businesses — small, medium and large — to avoid many of the taxes and mandates that come with ObamaCare.
According to industry research, a typical self-insured group can expect to save more than 10 percent (versus traditional health insurance) without having to sacrifice quality of care. Even uninsured individuals in many states can access self-insurance via trade associations and community groups, instead of having to buy high-cost individual policies through the ObamaCare exchanges.
The administration and its allies fear that the more people gravitate toward the successful, free-market self-insurance approach, the worse their government-engineered health “reform” will look. We’re already seeing the beginning of this trend.
Despite the president’s repeated promises to the contrary, too many Americans are now finding out to their dismay that they can’t keep insurance plans they like — because the ObamaCare law is forcing insurers to cancel them. Worse, they have to spend much more for replacement policies.
Meanwhile, ObamaCare penalties and onerous rules have forced many companies to lay off workers or cut hours to turn full-time employees into part-timers. Small-business owners should not have to make their hiring decisions based upon tens of thousands of pages of regulations in the Affordable Care Act.
That’s why the escape hatch is so appealing. Self-insured companies can tailor their health benefits to meet the needs of their workers. They don’t have to pay for services their employees neither need nor want. And self-insured plans pay their own medical costs, without having to subsidize the health-care costs of other groups.
It should be every elected official’s goal to help find ways to free employers from dictatorial rules that hinder their growth. ObamaCare does the opposite, and that’s why the self-insurance option needs to be preserved.
Millions of Americans are seeing firsthand what a disastrous law this is, and searching for ways to escape. Democrats are panicked: If enough businesses do not join ObamaCare and instead opt into self-insured plans, their prized program is sure to implode quickly as its costs skyrocket.
Of course, it may well implode anyway — but “progressives” are trying to save it by forcing as many people as possible into it.
Self-insurance can save countless Americans from ObamaCare’s overpriced, low-choice, poor-quality health care. Preventing the president and his political cronies from undermining this alternative is vital. It’s a winning fight for small businesses, our economy and the American people.
George E. Pataki is a former governor of New York