So many of us predicted this that no one can say they weren’t warned. Unfortunately, though, we will see the same thing happen after ObamaCare is implemented in 2014:
The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budget.
Since April 1, the date many insurance contracts are renewed for small businesses, the owners of about 90 small companies terminated their insurance plans with Braintree-based broker Jeff Rich and indicated in a follow-up survey that they were relying on publicly-funded insurance for their employees.
In Sandwich, business consultant Bill Fields said he has been hired by small businesses to enroll about 400 workers in state-subsidized care since April, because the company owners said they could no longer afford to provide coverage. Fields said that is by far the largest number he has handled in such a short time.
The article points out that it’s the small, independently owned, mom and pop businesses like hair salons, day care centers, restaurants, retail boutiques that have been affected the most:
In New Bedford, the Early Learning Child Care center is now paying $1,500 quarterly in fines to the state, instead of the $30,000 it contributed quarterly toward 13 workers’ health insurance premiums. When Executive Director Judy Knox terminated the company’s health plan late last year, she asked Fields, the consultant, to help 10 of those workers enroll in Commonwealth Care. The other three went on spouses’ plans or were eligible for Medicare.
“We had had, in the three previous years, between 17 and 18 percent increases every year,” Knox said. “I was so worried about the staff and their coverage, but for most of them, Commonwealth Care seems to be working out very well.” The state program covers people with incomes up to 300 percent of the federal poverty level.
The cost differential is so enormous who would not drop private health insurance and opt to pay the fine in this instance?
However, as more people enter into state health insurance exchanges, even greater pressure will be placed on private health insurance companies and their customers, as risk pools shrink and costs increase. Inevitably, even more small businesses will be forced to drop private insurance and direct their employees to state care.
Then the cycle will continue to spiral downward.