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Archive for September 13th, 2013

I’ve written about how Obamacare is a costly boondoggle.

I’ve written how it victimizes children, low-income workers, and retirees.

And I’ve explained how it exacerbates the real problem in our healthcare system.

I’ve even pointed out that there’s something good in the law.

But I’ve never bothered to discuss how bad laws usually aren’t as damaging as we think because folks in the private sector often figure out ways to work around some of the most onerous rules created by our overlords in Washington.

For example, some employers have figured out how to avoid Obamacare while still providing health insurance.

That’s the good news. The bad news is that the crowd in Washington is diligently working to make the law worse.

The Wall Street Journal has a must-read editorial on the left’s “crackdown on the booming ObamaCare alternative known as self-insurance.” It starts with a brief description of the ERISA law that allows self insurance – including the fact that those who self insure escape the costly and corrupt state-level mandates that cause regular insurance policies to be needlessly expensive.

Under this model, businesses and many unions bypass commercial health plans and instead pay directly for the medical claims of their workers. Self-insured plans enjoy lower costs and more flexibility because they are insulated from state regulations and mandates under a 1974 federal law known by the acronym Erisa.

While ERISA traditionally was something that only big firms could utilize, many small employers are now looking at self insurance as a way of providing health insurance to their employees without getting dragged into the costly swamp of Obamacare.

Self-insurance used to be concentrated among national companies that could spread risk over large pools of employees. WSJ ERISA ColumnBut self-insurance is now filtering down to businesses with 199 workers or fewer, as a hedge against ObamaCare’s federal mandates and the danger that costs on its small-business exchanges will soar. Some insurers are now selling popular products that allow groups as small as 25 to self-insure. In a 2012 study, the Urban Institute found ObamaCare’s incentives will cause as many as 60% of small firms to convert without regulatory changes.

Needless to say, the left is unhappy about this development because Obamacare only “works” if a large amount of people are forced to join the infamous exchanges.

So does this mean they’ll try to fix what’s wrong with Obamacare? Of course not. Instead they want to limit the freedom to self insure.

…the White House, liberal pressure groups and state and federal regulators are trying to close what they call the self-insurance “loophole” before more escape. Their political and actuarial fear is that if enough businesses don’t join, the exchanges could fail because too few younger and healthier people will subsidize everybody else. …Note how businesses that pay for their workers’ health care are suddenly a “threat.” Wasn’t coverage the point of ObamaCare?

You probably won’t be surprised to learn that the statists aren’t trying (at least for now) to repeal the ERISA law. That would generate hostility from big companies, many of whom are in bed with the politicians. Instead, there’s an effort underway to screw small employers.

…the left’s political target is so-called stop-loss insurance that is essential to the little guys. Unlike corporate America, small employers are more exposed to the risk of a single high-cost case of serious illness, so they buy this form of catastrophic coverage as a self-insurance backup. Liberals are pushing state legislatures to outlaw stop-loss policies for small and mid-sized business. Another poison pill is fixing the dollar levels where stop-loss policies are allowed to start paying—aka “attachment levels” akin to deductibles—so high that they are too risky for small businesses to buy.

The details are not overly important. All you need to understand is that politicians and bureaucrats want to make self insurance either illegal or impossibly expensive for small employers.

So what’s the bottom line? The WSJ editorial hits the nail on the head with these concluding words.

President Obama famously promised that if you like your health plan you can keep it, but this Erisa gambit will also scramble the plans of the businesses that already self-insure as a safe harbor. …Liberals hate Erisa’s pluralism in favor of total government control, and small business is merely the appetizer.

Amen. Many of the left don’t like things such as pluralism, federalism, and competition. Instead, they are motivated by a perverse desire to make everyone equal, even if it means we’re all suffering equally. Particularly if that suffering facilitates a redistribution scheme.

In the title to this post, I asked whether the attack on self insurance is an example of sleaze and corruption or an example of why government intervention doesn’t work.Government Solutions The obvious answer to that question – as perfectly illustrated by this poster – is “Yes, all of the above.”

There’s cronyism because the government is hurting small employers and protecting big business. But there’s also run-of-the-mill government failure, which inevitably happens when you make productive behavior more costly while also creating incentives for more dependency.

I frequently close my posts by sharing some humor. And if you’re looking for a chuckle, there are some great Obamacare cartoons here, here, and here.

But today I want to finish up with a serious point. While it’s increasingly obvious that Obamacare won’t work, that doesn’t mean it will collapse on its own. You need new legislation to undo the damage caused by previous legislation (as well as all the other programs and intervention that existed before Obamacare).

Fortunately, I have a six-part hypothesis explaining why we should be optimistic that this can happen.

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