US Healthcare and Unintended Consequences

An employer cuts healthcare coverage for employees in anticipation of the healthcare reform act (BusinessInsider):

When they wrote this year’s legislation, policymakers had a choice: They could emphasize near-universal coverage, or they could emphasize controlling costs. They opted for near-universal coverage. As a result, business owners and higher income Americans (many of whom, like me, are one and the same) will soon pay an array of higher taxes to finance the broader coverage that President Obama and congressional Democrats mandated.

So I now find myself responsible for paying for health insurance for more than 30 million strangers. Yet the cash needs of my business, which is growing despite the difficult economy of the past few years, are not going to decline. Nor are my personal financial commitments going to decrease. The only way to make financial room for those 30 million strangers is to stop paying for insurance for the 20 people I work with every day.

Politics mandated that Obama and his fellow Democrats at least pretend that their legislation will constrain runaway spending. The new law’s very name is part of that pretense. But there is little in the actual legislation that has any real prospect of controlling spending; instead, the law attempts to control premiums by fiat through new regulations and oversight. Government may be able to prevent insurers from pricing policies in ways that make sense, but it can’t force them to operate at a loss. The other shoe, in the form of higher premium prices or a rollback of the new law’s mandates, is certain to drop. Higher prices are the more likely outcome. [...]

The law’s supporters will portray employers like me as bad guys who are using the new law as a smokescreen to make changes we wanted to make anyway. Though the accusation is false, it has a germ of truth: Runaway health insurance costs have been a burden for every business that pays them. Every sensible manager has at least considered steps to stem this financial hemorrhage. Many of us were just holding on so as not to disrupt employees’ lives while we waited for policymakers to do something.

Now they have done something, and it only made the problem worse. There is no longer any reason to wait.

Read the whole thing.