Health insurance in America

The insured and the unsure

Will Obamacare spur firms to drop workers’ health cover?

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Readers' comments


Zeke Notlin

I have no doubt many employers will drop coverage. Then again I also have no doubt that the more that drop coverage will end up making the penalty for doing so increase, AND make those employers who keep coverage more desirable to work for - and those employees more motivated.

Massachusetts's record is pretty clear, premiums for small businesses will go up in the short term as those previously uninsured will get coverage, then it will level off and rate hikes be more in line with inflation. ER visits will go down 5-8%, and we'll end up with a much larger segment of the population covered for a marginal increase in overall money spent.

There are issues, the penalty/disincentive amounts, doctors who won't take the insurance, employers who drop insurance, but all in all this is about the best we could have hoped for with the present field of entrenched interests.

JJ Hantsch

"This is especially true if firms that stop offering health insurance pass some of the savings on to workers in the form of higher wages." Welcome to Fantasyland.


It may be traumatic for employees in the short to medium term but it in the longer term this is a "healthy" development. Healthcare should not be tied to employment.
If it also causes people to take more responsibility for their health so much the better.
Finally the disappearance of a bottomless pit of money should provide an incentive to deliver healthcare more cost-effectively.
In fact it is because I foresaw the likelihood of such developments that I felt Obamacare, for all its faults, was a good idea.

Dr Lou

And minimum wage laws were supposed gut employment, kill competition and destroy job creation. But that didn't happen either.

Employers have been dropping, compromising and significantly increasing employee contributions to health care plans long before Obama offered his first comments and his own concepts for health care reform. To now conflate those issues with our current, extremely weak-kneed but better than nothing health care reform legislation is disingenuous, to say the least.

That employers and the health care industry have, in fact, been able to get away with such an overt manipulation of the market for so long should be a point of journalistic interest as opposed to such decontextualized reports as this one in The Economist. It is also yet another case in point for the drastic need for real changes to our system of health care coverage.

If Americans were honestly informed that employer-based health care insurance is considered 'salary' and if that insurance was more reasonably priced and the numbers comparisons given were honest (e.g., salary with health care v. salary without health care), I'd guess that many Americans would be quite supportive.

But the pure propaganda and disinformation has been so pervasive and so perverse that it has even come to be adapted by the media and printed as if it was of primary relevance.

With consideration to the percentage of businesses once promised to be undercut based on minimum wage laws, numbers of about 10% of current American businesses threatening to cut health care coverage really isn't that substantive. It is likely even less substantive inasmuch as those numbers should be seen as in extreme flux and not particularly reliable at this juncture.

Second, of course, is health care coverage could be directly influenced by competition on the free market for skilled and/or loyal workers. If, for instance, one restaurant businesses offers an expected salary to include health insurance while another does not, I'd think the company with the health care coverage would have a much better pick of its potential employees. And that is competition...!

Some of the inherent challenges to 'Obamacare' is that it was diluted more and more in an attempt to draw in political compromise; compromise that was never actually available in the first place. Obama does seem to have finally figured this out as per his Inaugural Address.

And like the threats from minimum wage laws which never materialized, this new health care legislation is also destined to be the new 'norm' even with, or because of, expected perturbations. I don't much expect many of those employers who have offered such ominous predictions to actually follow through and gut employee health care. If they do, it will be at the peril of their own competitiveness and sustainability.

CO2 fuel for plantlife in reply to Dr Lou

...competition and commoditization will occur with the supply side - the Doctors, Dr. Lou. It is a travesty to beleieve that the US Governemnt will (1) become involved, and services will improve; and (2) that the lowest common denominator in the economy will not end up paying for this.

With nationalized health care (if that's what occurs due to most companies abandoning their methods), we will see two calsses of health services - the governement's, and the one that people will be willing to pay premiums for.

Now, if you are a doctor, and you have invested much of your own skin, which market will you pursue, regardless of the hippocratic oath? One would think, as with all Americans, the more profitable area.

It will all fall back to supply and demand...with supply going to those that will pay the greatest value. This entire debacle did absolutely nothing to control insurance costs and premium increases. To the contrary, it is another "land grab" by DC. You need to wake up from your multi-sylabic rants and recognize reality. The American population has become spineless, and is looking towards DC to sooth all complications. Life in America is driven by those with intestinal fortitude...this is yet another Obama Road-Bump in this evolutionary path. I don't hold Obama accountable as he doesn't hold himself accountable. I pity the masses, much like you, that put this genmtlemen where he is today. Enjoy this Liberal ride Doc Lou.

Dr Lou in reply to CO2 fuel for plantlife

In truth...the US has long had different 'classes' receiving health coverage and care.

(1) Those who have excellent health insurance coverage which, of course, includes the same demagogic politicians whose propaganda has been most effective in getting their constituency to consistently vote against their own best interests;

(2) Those who are under or ineptly insured and who have health insurance which resists effective utilization while still mandating huge out of pocket charges; and

(3) The large numbers of citizens who do not have health insurance coverage.

You also might be shocked to hear that for the many Americans in category #2 above, their health insurance provider has been rationing and explicitly manipulating their coverage for years.

For instance, check and you'll discover that when a huge number of persons who, after paying huge co pays and monthly premiums actually become ill, their coverage is arbitrarily dropped outright, greatly reduced and/or can only be kept based on paying even sharper increases to their monthly premiums.

Has Limbaugh or any of his friends shared this information with you?

Since you apparently don't read much on this issue to begin with; let me note that the US Government already IS involved in health coverage. And where that it true; Medicare and the VA for instance, those programs are generally run well overall and are generally most effective. And that is information taken across the recipients of those services. While I realize that this satisfaction is not at 100%, those who have no or almost no health insurance are far more dissatisfied and harmed.

Also, for point, it is quite common in countries like Britain and Canada who already have a competent national health care in place that those who can do pay for additional medical care and treatment. And there is nothing at all wrong with such a process.

Interestingly, there are still plenty of physicians to go around and who work with the national plan. What a national, single payer health coverage model does is to provide a baseline of competent and safe medical care for all rather than JUST those able to make additional purchases.

Your biases, lack of information and willingness to offer inaccurate facts, CO2, is sadly obvious. It is also apparent that you are one of many who have bought all the way into the GOP's Big Con.

I'm guessing that you also have a limited appreciation of the fact that the American economy is being bled by the private health care industry and that a baseline national level of care would go a long ways towards economic stabilization as well.

So...CO2...revel in the willful ignorance that you have accepted as a political strategy from those same politicians who have excellent health care for themselves and their families and really don't give much of a hoot about you and yours so long as they maintain their own wealth and power.

And I pity those, like you, who actually supported Romney's attempt to transfer the Bain Board of Directors to the White House in order to start a hostile take over of the US economy. Thankfully, a majority of American citizens did not let that happen.

You also likely didn't read today that Obama's popularity is currently at 60%; a three year high.

One last is less 'liberal' to work towards a baseline of competent and available medical care for all and lots more based on human decency and responsibility along with an intelligent grasp of national level economics and governing.

Unfortunately, basic decency and respect for fellow citizens along with a fundamental grasp of real time economics has been missing from the GOP's agenda for a while now.

CO2 fuel for plantlife in reply to Dr Lou

Must there only be one class to continue America? Decency for our fellow man is actually realizing that there exists no utopic answer in a finite world Doc Lou. I don't spew sound bytes or disrespect...much like you just accomplished, simply because I told you that I don't agree with your viewpoints. Apparently you're an omniscient proctologist of some sort, given that you determined a need to educate me.

Please wake up and appreciate reality...the Federal Government is here to feed their own internal desire for growth and insipience. You, friend, seem to believe that magic occurs when the top echelon of the US demograph subsidizes this entire baloney.I congratulate you on being a NEW communist, or liberal genius.

Lastly, I believe that by looking out for one's self, society will be strengthened. Relish in the fact that Mr. Obama has laced your kool-aid with an extensive price which will be born by future genrations. There is no shame to running a business, or the Federal Governement for that fact, within some budgetary constraint. I don't heap praise on people until they've eraned it. You, like the rest of the cited population to some un-named approval rating, will enjoy this unfolding debacle. Pleasae respond back to me when interest rates begin to rise...Obama's collateral damage will be worse than Jimmy Carter's. Howvere, I am sure through you strong moral character and personality, you'll find some conservative to blame...afetrall that is the democratic past time is it not? Cheers Dr Lou. I see your call, and raise you one more...

Dr Lou in reply to CO2 fuel for plantlife

'...realizing that there exists no utopic answer in a finite world...' Really? From whom did you get that ridiculous definition of human decency? It does serve to let you figure that you are off of the hook from actually having to do anything or care much about anybody but those who think the most like you, doesn't it.

Sounds like you must have been frightened and confused at some point by one of Ayn Rand's tragic philosophical tomes.

An '...omniscient proctologist?' Since this doesn't actually mean anything, I'd be mildly curious whether you made that one up all on your own.

And you clearly do need more education, lots more accurate information, a better understanding of America and American government and a much less silly style of writing. Until such time as any of those occur, there is little point to continuing a conversation.

CO2 fuel for plantlife in reply to Dr Lou

...seem to have struck a nerve - I apologize.

Omniscient = all knowing. You obviously, through multiple direct statements, believe you are much wiser. Might I don't need to include "ego" in my writings Doc. This too is a common thread in liberal practice. I surely cannot appreciate the magnitude of the problem, as I am of limited IQ and too self-serving. That would hurt most people's feelings Lou.

Proctologist =, walk with me here,I believe your viewpoints smell of feces. Therefore my colorful reference.

Now, getting back to some conservative conspiracy you have concocted, I have never read any of Rand's writings; No pictures.

Your initial response heaped praise on this state-run health care structure I believe. In that, you are wrong...that's my only point.

Further, it must be hard for you to sleep, when there are so many injustices being levied upon the American population. I wonder why the American population is living to all time records for average age?

Are you truly a practicing doctor, or some theory espousing college professor? Either way, you must realize that the "capacity" available will not grow under profit constriction. The Federal standards you state, overall, will be lowered to meet this increased demand. Responsiveness will go out the window.

I thank you for the opportunity for our general discourse. Seems that we all now realize that this is the reason the US may be strong again someday. In the meantime, you can continue to inhale the this stuff. Just remember, in the end, someone will need to pay for this. There is not enough 'principle' in the US fre-market economy to float the DC Balloon. My grasp of economics may surprise even you Dr Lou. I trust your curosity has been addressed.

t writingham in reply to Dr Lou

As with the immigration issue prior to the Nov 2012 election, the GOP insists on vilifying Obamacare and using it as an argument for denying citizenship to undocumented workers. There's no talking to this, let them "be schooled" again in 2016. Thanks for your posts, Dr. Lou.

Dr Lou in reply to t writingham

t writingham....I appreciate the feedback and thought. And I the GOP, and its numerous sad and self indulgent sycophants continue to lose...some will, hopefully, continue to learn.

Unfortunately, their learning curve is quite long as the poster who responded to me in this string makes obvious.

I can only hope that higher profile GOP members, like Chris Christie, Marco Rubio, Jeb Bush and, maybe, even Paul Ryan can hold their ground and work on changing the pathetic degree of willful ignorance that the GOP core and 'tea party' elites so carefully protect.


Rhetorical questions: Will my company be fined $2,000 for refusing to sponsor my auto insurance? Or my home insurance? Why not?

Kudos to the author of this article for pointing out how and why it became such an article of faith in the US that employers would subsidize their employees' health care.

Costs have become ridiculous. Recently, I had an eye exam. I spent 30 mins with my opthalmologist who ran a quick test with an elaborate camera attached to a laptop computer. The explanation of benefits from my insurer showed that they were charged $430 for that consultation. I had a similar experience four years earlier with a neurologist, which was just a straight consultation and a referral to a physiotherapist; in and out in 15 minutes, and the bill was $390.

Something is wrong with this picture.


"Mr Obama does not want companies to dump their staff on his health exchanges, so his health law will impose a fine of $2,000 per worker on any employer that does not sponsor health insurance (employers with 50 workers or less are exempt)."

I hate this. Health insurance tied to the employer is evil. It limits an employee's freedom to dump bad employers for one thing, and makes them slaves to the insurance selected by their dear leaders for another. So much for American love of freedom.

WT Economist in reply to teacup775

Someone should look into the 401K. The government gives you a tax break, but only if you turn your savings over to your employers to select an investment company and negotiate the fees.

In most companies that might mean fee discounts.

But I guarantee in some someone is taking a kickback to allow the investment companies to get away with excess fees at the expense of retirement savings.

teacup775 in reply to WT Economist

psh. I think there is one study suggesting that 401Ks are poorly serving individuals. Not that many really save enough.

There's another little demographic bomb waiting for the US economy.

American society will probably be dragged into the traditional model. Parental social security has historically been children.

WT Economist in reply to teacup775

"Parental social security has historically been children."
And perhaps that's why parents felt the need to model "family first" to their children, even if that meant their marriages didn't thrill them. But in the last 50 years, with the growth of divorce and single parenthood, that hasn't been the case.
We're lucky enough to have parents worth caring for, and our children would probably be willing to do the same. But what about all those who put their kids through a divorce, or were never around to begin with? Who will be there for them at age 80?
I suspect its gonna be ugly, and there will be many lives of quiet desperation.


The gradual reduction and elimination of the "employer-sponsored insurance" (ESI) system is the single most important feature of Obamacare for increasing access to and quality of healthcare in the US. It will enhance the competitiveness of american business compared to their counterparts in the rest of the civilized world by reducing the enormous fixed and marginal costs associated with ESI. It will also put individual patients/consumers in more direct contact with their insurers and providers, giving them real access to price/quality information and a financial incentive to use that information. If you value a free-enterprise system for health insurance/care, then this is as good as it will get. Personally I vote for single payer, but won't let the perfect be the enemy of the good.

guest-ileleso in reply to SB in STL

I agree...I too would vote for properly constructed single payor system for a specific budget.

Its ironic that the country has to go through the motion of the private route - with its unwilling employers and unwilling buyers, who will ultimately find they prefer the single payor as more employers back out.

It will be quite a bumpy ride.

WT Economist in reply to guest-ileleso

I'd worry that under single-payer, the decision as to how much to pay various health care providers would be strictly political, as there would be no private market to reference.

In New York's Medicaid program back in the day, for example, payments per beneficiary for physicians was among the lowest in the country, but payments for hospitals were among the highest, strictly as a matter of political deals in the state legislature.

guest-ileleso in reply to WT Economist

I think a "properly constructed" system would be able to bring all stakeholders together to achieve balance based on a specific national budget - x% of GDP for example.

Unfortuately the main reason that US healthcare consumes 17% of the economy is the compensation to providers and the unintended incentive of too much service. There is also a lot of fraud, waste and administration in the delivery of care.

Some argue that in return US has the best quality of helthcare around. It may be true at the very higher end of the system but for around 80 to 90% of the situations its not too far out of the ballpark.

teacup775 in reply to guest-ileleso

"Some argue that in return US has the best quality of helthcare around."

If you are insured and not under or un insured, and kind of. My own experience with the best quality around leaves me cold. Too many mistakes. Also around 200,000 people die every year from preventable errors and bad hygiene amongst staff and doctors.

Also it seems that many insurers are allowed to charge a specific percent over expenses for profit. The easiest way to make more money is to expend exenses; the more doctors charge, the more money is to be made. I'm sure they lay some interesting accountancy games.

WT Economist in reply to guest-ileleso


We are talking about the same country (the U.S.), with the same Congress, and not Canada or Sweden, aren't we? And the states are, or at least used to be, worse for the most part.

Paul Marks

American health cover is very expensive because of government subsidy programs (that have the same effect in health care that government backed tuition loans have had on the cost of tuition over decades - basic economics "Economist"), and because of the vast web of government regulations (Federal and State).

Obamacare INCREASES the subsidy programs and the web of regulations (mandates and so on) so OF COURSE it will increase costs and undermine real (as opposed to fake "private provider" government backed)p private health cover.

All this was obvious from the start - yet the Economist magazine supported Obamacare.

You should not be forgiven for this.


As I said at the time, the real healthcare reform will be what happens when Obamacare is found to be unworkable and unaffordable.

WT Economist in reply to Ohio

At that time, hopefully the politicians will agree to improve it.

Instead of going back to what until then has to be considered the Republican alternative. Soaring government health care expenditures, directly (through programs such as Medicare) or indirectly (through the tax break for employer-provided care and private insurance for public employees) for an ever shrinking share of better off than average Americans.

While mroe and more Americans, less well off than average and in younger generations, pay for this but are uninsured and get nothing. Either by design (the Republican alternative) or "by accident" (the Democratic alternative).

As it stands, the Republicans demand that you get more government subsidy for health insurance the wealthier you are. And the Democrats demand you get more federal health subsidy the more you spend (for high cost public employee plans).

If nothing else, Obamacare put SOME limit on the growth of spending on today's seniors (beneficiaries of the Republican/Bush Medicare prescription drug plan) and did SOMETHING for someone else. For that reason alone, it was an improvement -- and the Republicans opposed it.

Ohio in reply to WT Economist

When the time of reckoning comes, neither party is likely to enjoy the majorities that President Obama had in 2010. I hope the compromise arrived at will create a simple and limited mandate to provide basic healthcare for all, together with a block grant to the states. That is the only chance for those who want single payer healthcare to receive it. That is also the only chance for those who want a voucher system to receive it. Yes, that delegation to the states will create some failures, but eventually success is contagious, and the states will eventually coalesce around a solution. The federal government acting alone, particularly with the support of only one party, will never be adventurous enough to find a good solution.


"IF YOU like your health-care plan, you can keep your health-care plan.” That was what Barack Obama promised, time and again, to voters nervous about his plans to shake up America’s health-care system. It was an empty promise..."

Would that the Economist had deigned to point out that the President's signature promise for variants of his health reform bills - and many others besides (e.g., the individual mandate is not a tax, savings of $3,000 per family per year, it will reduce the deficit, people will like it better once it's enacted, etc.) - were empty or likely to be proven so before it was passed into law. We might have had a better bill that enjoyed popular support.


I don't know why anyone finds this surprising. The second largest flaw of the law is the fact that penalties for employers who fail to provide insurance and for individuals who fail to purchase insurance are significantly lower than the cost of insurance. Many individuals haven't yet realized how large this cost differential is, but once the system is fully in place, many individuals (including the healthy, the wealthy and the financially squeezed, but not poor) will also likely pay the penalty and opt out of the system, possibly leaving just as many uninsured as before the law's entry into force. If many opt out, the system will be a house of cards that will collapse under its own weight as insurance costs are shifted onto fewer and fewer people, causing more employers and individuals to find health insurance unaffordable.

The principal flaw of the law not addressed in the article is that it focused almost entirely on access to health insurance, rather than access to health care. As someone in a high cost city who can no longer find a primary care physician willing to accept insurance without the payment of additional "concierge" fees of several thousand dollars annually (on top of insurance payments) or who is willing to accept any insurance, I can attest that health care is becoming less, rather than more, available. I have seen this trend accelerate since the passage of the Patient Protection and Affordable Care Act and don't expect it to improve anytime in the future. Insurance simply isn't very helpful when most front-line doctors also choose to opt out of the system (either in whole or in part). We have a very long way to go before we get anywhere near a system that provides universal health coverage.

WT Economist

It was only due to fear of big changes that Obamacare did not eliminate the tie between workplace and health insurance altogether.

That tie discourages entreprenuership among experienced workers (to the other risks is added the loss of health insurance), discourages workers from seeking new jobs (their pre-existing conditions and those of their family may no longer be covered), and makes aging workers and those with health problems unemployable in all but the largest firms (because it would increase their health insurance bill). It is no accident that employment by those age 55 to 64 has been falling while employment by those 65 and over, covered by Medicare not the employer, has been rising. These are all economic losses.

The existing system also means that workers are unaware how much they are paying for health insurance, and may thus contribute to its cost. And who is to say that employers are getting the best deal for their workers? I sense an agency problem.

What is being pointed out is that Obamacare may do by stealth, in an unplanned an inequitable way what should have been done to start with, in a planned equitable way. Health insurance, and health care, should be funded by individuals and the community as a whole through the federal government. If employers provide cash vouchers for health care, or just cash that could be used for health care, that would be a good thing in the long run.

4R7JEQdCwq in reply to WT Economist

What will be interesting is in the 10 years how does this act of un-attaching healthcare to the work place encourage freedom of movement and entrepreneurship among a currently discouraged class of works.

I for one am ecstatic, as it reduces an a lot of fear from my daily life. I have a medical condition that cost me approximately 30,000 dollars a year if wasn't for health insurance provided by the company I work for. Having an emergency fund and a saving account, but I couldn't pay for this expense year after year.

I can now look for jobs in smaller organizations or start my own business. This could act by consequence could lead the creation of new jobs and companies.



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