The Real Costs of ObamaCare

by Chuck Donovan

Government intervention in markets causes prices to rise and makes things more difficult for lower income people to afford things.  Healthcare is no exception to this rule.  Below are actual numbers published by a real US business giving an example of what the effects of the coming social and economic storm known as “ObamaCare” will be.

A US corporation with over 80,000 employees released the following information.  The corporation has a very good reputation with its customers, employees, and with the communities it works in.  The employees receive significant medical, dental insurance coverage for themselves and their families, life and accident insurance coverage, and retirement benefits in addition to their salaries.  Motivation and loyalty among employees is high due not only to their compensation, but their work environment and the respectful way they are treated by their management.

The numbers below reflect the actual experience of this business.  These numbers will be repeated many times once Obama Care begins in earnest in 2014.

  1. Inflation – Unlike the government’s CPI, the real world has to deal with actual price increases.  This company spent about $500 million last year to cover healthcare for their employees.  Their documented expenses have increased between 7% and 10% annually for many years.  Estimated increased costs this year alone will be an additional $40 million – that is before ObamaCare expenses are added in.
  2. The Reinsurance Fee – will add roughly $10 million in added costs for the company’s 160,000 plus covered employees, their families, and retired employees.  It amounts to what the company referred to as “a direct subsidy from our employees to those who participate in <healthcare> exchanges.”
  3. Covering “Children” until Age 26 – added more than 8,000 “children” to their rolls creating a permanent increase in costs of about $14 million annually.  Additionally, these “children” are consuming considerably more health care than other covered children.
  4. The Individual Mandate – This requirement will add another $14 million in costs annually.
  5. Thirty Hour Rule – This Company is not planning to reduce employee hours (at this time).  However, it pointed out that other major companies are planning to reduce work hours.  This amounts to a charge to lower income workers.
  6. Pay or Play Penalties – This business already provides more coverage than what is mandated by ObamaCare.  However, their estimated compliance costs are significant and they view the rules as onerous:
    • The rules, “…unnecessarily impose HR information systems changes that will be costly to build and maintain.”
    • “…employers will not have time to react should final regulations be issued this year.  This puts employers at risk of being assessed penalties in innocent situations…. …and imposes additional costs…”
  7. Cadillac Tax – Employers are reducing or terminating “rich” plan designs in order to ensure they do not have to pay the tax.  Eventually it is not just the “rich” plans designs that will be affected.  The “Cadillac” tax level represents a ceiling on the value of benefits provided by employers.  The level rises each year at the rate of the CPI.  Because actual prices are not reflected by the CPI eventually all plans risk being subject to the Cadillac Tax.  The unintended consequence over time will be that businesses will continuously reduce benefits to employees to avoid this tax.
  8. The Real Cost – For this one company, the costs above combined with normal medical cost inflation, their cost of providing health care to employees will increase by nearly $100,000,000 next year without an increase in benefits for their own employees.

Consumers and Labor Will Pay For Obama Care 

With the increased costs for Obama Care, all businesses will have increased expenses.  There will be less money left for employee benefits, pay, business investments, or job creation.  Consumers will further shoulder the burden of the hidden cost of ObamaCare when they purchase goods and services from companies that have been forced at gunpoint to comply with this law.

The above information was published by that company with the intent it be shared with United States Secretary of Health and Human Services Kathleen Sebelius and with the President.  I wonder if either of them will ever see or comprehend these facts.


The unintended consequence of ObamaCare will be to even more rapidly increase medical costs than government’s blundering ways already have.  You can forget reduced medical costs for Americans.  ObamaCare, along with all of the other interventions into healthcare will be a financial disaster for patients, families, businesses, employees, and the American economy.

Doctors, nurses, and other healthcare providers are not slaves.  We cannot force them to provide care and medicine for sick people.  These fellow Americans, working and producing in what we refer to as our healthcare system, are attempting to live their own lives and to support their own families.  They work for wages and compensation.  Wages and prices are only properly set in a freed market.  Any intervention in the process of the market setting prices causes unsustainable distortions in pricing and makes access to those goods more difficult, especially for people with lower incomes.

If you want to see more people get healthcare you are going to have to do something nobody in Washington, D.C. seems willing to do.  You must not be afraid to let freedom win.