Saturday, March 24, 2012

Watch out for companies dropping health coverage

The Affordable Care Act really starts working in 2014. Under the law, major provision of which go into effect, in 2014, employers can drop coverage for employees and pay a penalty (tax). The tax is used by the government to provide health insurance on private exchanges. The government currently subsidizes employer plans by letting companies deduct healthcare expenses.

However, many employers are still weighing the cost of paying for employees health coverage or paying the tax penalty. The tax penalty is between $2000 to $3000 dollars per employee. Large companies would not be affected but smaller companies with expensive health plans may consider dropping coverage.

Large companies typically offer premium health coverage to attract higher quality employees. They must also worry about their reputations as good places to work. However, premium health plans offered to executive will be taxes under the ACA.

Minimum sized and small companies offer health coverage for a variety of reasons: to attract and retain employees, reasons on loyalty, fairness and equality, and social norms and low costs. Now the costs are overwhelming all the other reasons.

The costs of healthcare are forcing everyone's hands a cost skyrockets. When employers drop coverage, workers do not look for a private solution, they ask government for protection. It makes people think that the best solution one, universal government program.

I think many Republicans an

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