Court hears ObamaCare appeal, study says costs will rise

Three judges on the 11th U.S. Circuit Court of Appeals will hear arguments in downtown Atlanta this morning in the most promising legal challenge to ObamaCare. This is the lawsuit filed by 26 states, including Georgia, which led a U.S. district judge in Florida to declare the federal health-reform law unconstitutional. Whatever happens in this appeal, this case is most likely headed to the U.S. Supreme Court.

(NB: I’ll be at the hearing but, because the court doesn’t allow members of the public to bring smartphones or computers inside the building, I’m not sure how soon I’ll be able to post an update.)

With good timing, the management consultants at McKinsey & Company have just released a study about the likely effects of ObamaCare based on a survey of 1,300 employers. Grace-Marie Turner, head of the free-market Galen Institute, explains in a Wall Street Journal op-ed that McKinsey believes the law is going to lead to a lot more employers dropping health insurance — and passing costs on to taxpayers — than Democrats let on when passing the law.

The survey…found that up to 50% of employers say they will definitely or probably pursue alternatives to their current health-insurance plan in the years after the Patient Protection and Affordable Care Act takes effect in 2014. An estimated 156 million non-elderly Americans get their coverage at work, according to the Employee Benefit Research Institute. Before the health law passed, the Congressional Budget Office estimated that only nine million to 10 million people, or about 7% of employees who currently get health insurance at work, would switch to government-subsidized insurance.

The optimistic way to read this survey result is that the one-half of employers that say they’ll drop coverage represent smaller firms rather than bigger ones — meaning fewer than one-half of workers (and their families) would be affected. Alas, Turner writes,

Another McKinsey analyst, Alissa Meade, told a meeting of health-insurance executives last November that “something in the range of 80 million to 100 million individuals are going to change coverage categories in the two years” after the insurance mandates take effect in 2014.

Which suggests the optimistic view is unwarranted.

Turner also notes that former CBO director Douglas Holtz-Eakin last year estimated that 35 million more workers than the government forecasts will be shifted onto the ObamaCare rolls — at a cost of some $1 trillion, more than wiping out the alleged deficit reduction Democrats claimed ObamaCare would yield.

Now, imagine if the additional number is closer to 70 million or 100 million Americans: $1 trillion more could become $2 trillion or $3 trillion more.

The McKinsey study (registration required) included an explanation of why its survey showed a higher shift than other ones, including this:

Interest in these alternatives rises with increasing awareness of reform, and our survey educated respondents about its implications for their companies and employees before they were asked about post-2014 strategies. The propensity of employers to make big changes to [employer-sponsored insurance] increases with awareness largely because shifting away will be economically rational not only for many of them but also for their lower-income employees, given the law’s incentives. (emphasis added)

In other words, it seems likely that ObamaCare is not moving us toward a more equal health-insurance scenario, but toward one in which the government pays for more and more middle-income families — who will bear the brunt of efforts to keep the government’s costs down, if there are any such efforts — while companies continue to take care of higher-income folks.

Just like the president and other Democrats sold it, right?

– By Kyle Wingfield

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118 comments Add your comment

xbronx

June 8th, 2011
5:45 am

Obama does not know what he is doing! His a spin doctor. All his finance people are leaving after taking our economy on a “BETA” ride. OMG get these folks out quick!!!!!!!

Road Scholar

June 8th, 2011
6:10 am

Like my health care insurance costs hasn’t increased over the past 10 years by about 10 % a year before “Obamacare”!

Lil' Barry Bailout

June 8th, 2011
6:20 am

If you thought your healthcare was a ripoff, you didn’t have to buy it. Now you do, thanks to your Idiot Messiah’s fascist power grab.

Lil' Barry Bailout

June 8th, 2011
6:24 am

Obozo also said “if you like your plan, you can keep it”. Now we learn that 50% or so won’t get to keep their plan after all.

Obozo: Lying fascist.

Independent

June 8th, 2011
6:24 am

I see a quote of ” up to 50% of employers say they will definitely or probably pursue alternatives to their current health-insurance plan”. How do you go from that statement to ” the one-half of employers that say they’ll drop coverage”. Pursuing options does not mean drop coverage. Why would the large self-insured employers suddenly drop their coverage? Their employees would suddenly leave en masse. The only changes that I know of to employer’s coverage are the covering kids up to 24 years old (already implemented and I don’t see companies dropping coverage because of it) and the dropping of the lifetime maximum. Self-insured company plans are ALREADY required to take all employees regardless of prior conditions, so that would not affect them. They would benefit from the requirement that all employees have health insurance, since that would add (mostly young healthy) employees to their rolls. So why the thought that companies are going to drop insurance coverage? Sounds like a bunch of scare tactics to me. There were some serious problems with insurance and health care delivery in this country and “Obamacare” is addressing those issues. I personally despise that 15% of my insurance costs go to support those who won’t take personal responsibility and buy health insurance because they think they are young and healthy and therefore immune to any health issues and then dump their bills on me via hospital charges. We needed Obamacare and I didn’t see anyone else doing anything about the problems.

Lil' Barry Bailout

June 8th, 2011
6:28 am

“why the thought that companies are going to drop insurance coverage?”
—————-

Uh, because independent study after independent study says they are?

Johnny Angel

June 8th, 2011
6:33 am

Because we all know that having all those people get health insurance is just going to ruin this country. Isn’t that right Kyle. If only we would leave things the way they were, everything would be all right. Costs were under control. Everyone that wanted or needed insurance was affordably covered. There were rainbows everywhere. Right Kyle. If only we had left this matter in the capable hands of someone like Tom Price. He would have fixed it. Isn’t that right, Kyle.

Lil' Barry Bailout

June 8th, 2011
6:38 am

And we all know that Obozocare is really going to LOWER deficits and will never exceed its cost estimates, right Johnny? And we all know that the federal budget is in such good shape that we can add a multi-trillion-dollar new entitlement program, right Johnny? And we all get to keep our plan if we like it, right Johnny? And the folks who couldn’t pay for their health insurance before will suddenly come up with the cash and won’t be relying on the productive, right Johnny?

Johnny, how much did you donate to health care charities last year? What were you doing prior to Obozocare to make your dream of health care for all a reality?

That’s what I thought.

Johnny Angel

June 8th, 2011
6:46 am

lil,

When I want your opinion, I’ll give it to you. Feel free to scroll past my post if you do not like what I have to say to Kyle.

I Report :-) You Whine :-( Thee Magnificent!!! Just sayin...

June 8th, 2011
6:49 am

Sarah Palin loves her country and cares about it’s future, while your average lib would join up with the anti American suicide bombing squad in a minute, if they only had the courage, so who’s version are you gonna believe about our history?

Ride on, Sarah, ride on!

The socialists are coming and you’re warning them too, girlfriend.

Lil' Barry Bailout

June 8th, 2011
6:53 am

Give Obozo credit for hanging out with a better class of terrorists–the ones he pals around with are bright enough to get the heck out of Dodge before the bombs they planted against American targets went off.

DeborahinAthens

June 8th, 2011
6:55 am

If you know anything about health insurance, you would know that if everyone pays for their insurance (essentially looking at the entire country as “the group”), the prices for everyone have to come down. That’s the way insurance works. It’s the same reason that when you work for a large corporation, your insurance is roughly 1/3 of what it is when you leave that company and try to get insurance on your own. I’ve been a financial advisor for 26 years, and you have no idea of the devastation that losing health insurance and health care costs bring to people’s lives. Many people save and invest for years, then, when the unexpected happens–Parkinsons, Alzheimers, traffic accidents–the insurers tend to drop their coverage the minute the person leaves his or her job–which they have to do for health reasons. Faced with having to get insurance on their own, either it costs too much, or, far more likely, no company will underwrite them at all. This is the “free market” at its finest. And the insurance companies pay billions to our representatives to keep the status quo. So, keep telling yourselves how awful “Obama Care” is. You are idiots.

Lil' Barry Bailout

June 8th, 2011
6:56 am

Johnny, if you can’t handle the pressure of a public blog just exchange private emails with Kyle.

Feel free to scroll past my post if you do not like what I have to say to (and about) you.

Mongo

June 8th, 2011
7:14 am

“up to 50% of employers say they will definitely or probably pursue alternatives to their current health-insurance plan” “The optimistic way to read this survey result is that the one-half of employers that say they’ll drop coverage”

Nice attempt at spinning Kyle. You’ll make a great right-wing hack one day.

Greta van Sustenance

June 8th, 2011
7:26 am

Health care is a basic human need. Why can’t we drop the lies, myths, and deceptions, and get on with providing basic health care for the residents and visitors of our country? All other developed countries have done so with good results in terms of life expectancy, infant mortality, and lower costs.

Well, as you can see from Kyle’s column and the readers’ comments, America is mired in BS and stuck with the ever-failing status quo in an ever-changing world. What hope can there be for reducing our budget and trade deficits, educating our kids in modern life skills, and providing jobs for all Americans who are able and willing to work?

Lil' Barry Bailout

June 8th, 2011
7:59 am

Greta, same question I had for Johnny–how much did you donate to health care charities last year to make your dream of health care for all a reality?

Mmm hmm…

Lil' Barry Bailout

June 8th, 2011
8:01 am

“What hope can there be for reducing our budget…”
———————-

In the same post as here cheerleading for the massive Obozocare entitlement. Too fkn funny!

jconservative

June 8th, 2011
8:09 am

Did Palin say how much the British paid Paul Revere for warning them about the Americans?

Maybe 30 pieces of silver?

Milan Kundera

June 8th, 2011
8:24 am

Our progressive friends need to keep telling themselves, over and over and over again, that government control of “basic human needs” is good and decent and “progressive.” Totalitarianism worked so well in the USSR with doctors as plumbers, plumbers as doctors, everyone with identical housing and Yugos. And Cuba has the best healthcare in the world, right?!? And prisons full of the ungrateful. You go, Deborah and Greta!

tar and feathers party

June 8th, 2011
8:40 am

Under ObamaCare, who is going to pay for the health care of the illegals? Same as now, no one, they just stiff the hospitals and doctors. Here is some good news, “Immigrants leaving Ga. behind” reads the ajc headline. I say good, take all your family and friends with you, and don’t let the door hit you in the behind! Don’t come back now, Ya’all. That should save US some money on health care for illegals.

williebkind

June 8th, 2011
8:43 am

I thought we could get an exemption. Just talk to Mistress Pelosi. She will guide you through it.

BW

June 8th, 2011
8:46 am

Kyle

The ship has sailed. Even if you repeal this law in 2013, there has to be an alternative. Costs were rising faster than inflation without this law. People were dropping their healthcare due to higher and higher premiums before this came along. You can’t put the cork back on the bottle…what is the alternative to “Obamacare” to lower the cost of healthcare? We both know that it’s rationing…the only difference is how it gets rationed…a panel of bureaucrats mandating payments that are appointed by government or another panel at your insurance company telling you that you aren’t covered for a procedure. The reality is that if the increase in medical costs don’t slow, which is unlikely as the boomers start to retire, then all but the wealthy will eventually have serious problems maintaining affordable coverage.

Steve

June 8th, 2011
8:48 am

Greta,
Sex is a human need also. Government paid sex for all. You already have Anthony Weiner’s vote.

BW

June 8th, 2011
8:48 am

LOL @ jconservative….just remember it’s not her fault “the mainstream media” asked her a gotcha question like “What are you taking away from this trip?”

Uncle Billy

June 8th, 2011
8:48 am

Kyle is laying a lot on one study by a management consulting firm. The CBO came to very different conclusions. Also the Affordable Care Act introduces some cost control mechanisms which are not now in place. Our health care system does, after all, cost far more than the systems in any other industrialized country by 40%-100% more expensive per capita. Public expenditures here exceed public expenditures in many countries which have totally government run systems. Then there is the very large private expenditure here. The private system has cost increases which exceed the public system, i.e Medicare and Medicaid.–Kyle, of course, like most of the right wingers, believes anything which is convenient to his predetermined way of thinking. The “study” in question is about what employers say they will do after the have been “educated” about what is in the ACA.

Carlosgvv

June 8th, 2011
8:53 am

Georgia will pay a huge amount of money in legal fees by bringing this case to court. Since that money could have been used for the poor and homeless, Republican priorities are quite clear.

Truth

June 8th, 2011
8:54 am

Herman Cain for President

BW

June 8th, 2011
8:55 am

Carlosgvv

Since “the illegals” are starting to pack up due to HB87, millions will flow back into the treasury coffers to handle that

BW

June 8th, 2011
8:55 am

Herman Cain has as much chance of winning the nomination as Buddy Roemer does

stranger in a strange land

June 8th, 2011
9:00 am

Greta and Debra – I’m already forced to pay for food stamps for +/- 47 mil, so might as well force me to pay for their health care too.
Read, (or re-read) Milan K commments at 8:24.
sorry – gotta go now and do some work to buy someone else’s food stamps

dougmo2

June 8th, 2011
9:02 am

Carlosgvv,

Last I checked, the legal fees were being paid by private donations or being donated by the lawyers themselves.
BTW here is some free advice to you since you think that the government should control everything:
A- Grab your ears.
B- Jump up and down.
C- Pull your head out of your butt.

wampum

June 8th, 2011
9:07 am

Sounds like a win for small business to me. Shedding increasingly exorbant healthcare costs. Why do you hate small business?

the red herring

June 8th, 2011
9:08 am

i am still hoping the courts will save us from obamacare. That was locked room bad leglislation that will ulitmately ruing our healthcare system. The sad part is obamacare was and will be more detrimental to healthcare of seniors than Ryan’s plan ever would be. Still the democrats continue their fear mongering and with the main stream media slanted their way get away with it. Hoping for real change in 2012….

wampum

June 8th, 2011
9:12 am

Why do healthcare insurers spend hundreds and hundreds of millions of our premiums lobbying our so-called representitives in Washington to let them continue their immoral ways of denying people coverage?

wampum

June 8th, 2011
9:18 am

Why does France have the best-rated healthcare in the world, with universal coverage, at a fraction of what the US spends per capita on healthcare?

wampum

June 8th, 2011
9:20 am

Why is the Right against help for the needy during this recession when the money will not trickle but flow back into businesses?

Lil' Barry Bailout

June 8th, 2011
9:25 am

Why do Canadians come to the US for care?

Glenn

June 8th, 2011
9:26 am

The company I work for saw our first DECREASE ever in health insurance costs . Thank you so much President Obama .

Dearie

June 8th, 2011
9:28 am

For those of you who believe the words of President Obama and favor Obamacare, please spin his words “You may keep your existing plan” for me. I like my plan. Will I be able to keep it? Not with all the requirements that will be forced on my insurance company.
I for one will take the penalty for not signing up for the mandate and when I need it, or have an existing illness I will enroll. I know countless others that are planning on doing the same things ~ that is unless Obama amends that clause once he finds his coffers are depleated.

Lil' Barry Bailout

June 8th, 2011
9:31 am

If you believe the promises of Obozo the Idiot Messiah, you’re either ignorant or a parasite.

wampum

June 8th, 2011
9:31 am

Why do people lie about our President’s motives for trying to help everyday Americans have the basic needs to be healthy and productive to pursue their own happiness?

Brain

June 8th, 2011
9:32 am

First, let me state unequivocally that I’m not a fan of ObamaCare. However, there are millions of false arguments being posited by the retardicans in opposition to this highly imperfect (and I’d offer, counter-productive) bill. The absolute, stark reality is that care is going to be rationed. Americans can no longer have it “the way it used to be”. To suggest repealing ObamaCare somehow preserves the status quo (which sucked, anyway) is a bald-faced lie.

Second, to suggest, as Kyle does, that the dawn of ObamaCare will usher in with it a horde of employers dropping coverage is a leap the study (which I’ve read) neither implies or suggests. The simple fact is that the type of benefits to which we’ve all grown accustomed have been changing for nearly a decade and will continue to change. Large employers will offer more HSA/CDHP options as we move through this decade, placing the cost burden increasingly on their employees.

The sad fact is that corporations will continue to rape America as they’ll continue to enjoy the (tax) benefit of having offered health insurance to their employees without having offered much of anything at all.

We have two and only two options. Everything in the middle is an absolute train wreck waiting to happen.

1) We can go to a single payor system like much of the Western, industrialized world has and into which employers and employees will contribute a tax.
2) We can de-couple insurance from employment and make ALL insurance individual from cradle to grave. Even still a mandate for coverage must be in place. But, in this instance each person would be responsible for his/her own insurance (just like auto) and that insurer would be incented to offer competitive rates, complete with a host of “wellness” services so that their customers didn’t cost them the farm in old age, where they are currently Medicare’s problem with which to deal.

Scooter

June 8th, 2011
9:34 am

How foolish does an American have to be to think this is the government program that will save money and reduce the deficit? Those who don’t know and respect history are bound to keep repeating the same mistakes. When someone looks to the government to provide their “Hope”, I guess that is what you get.

Rafe Hollister

June 8th, 2011
9:35 am

Kyle, you have to look at human tendencies here. As more companies drop healthcare coverage and turn their employees onto the government system, the roller coaster effect takes over. This gives more companies courage to do the same untll everyone is on Gov insurance. Barry knows this and it is what he wants. universal coverage for everyone. Once he has everyone on the government roles, benefits can then be reduced as incentive to join is no longer needed. The socialist utopia begins, universal healthcare for all.

wampum

June 8th, 2011
9:35 am

Why do Americans go to Canada in order to get treated because insurers here won’t cover them?

Glenn

June 8th, 2011
9:36 am

@ Wampum

Norway has the best rated healthcare in the world . No universal coverage as such . Everyone just has to have an insurance policy . Sounds like Obamacare no ? BTW , you don’t have to have mandatory health insurance . Just sign a waiver saying that if you have no insurance that the state isn’t responsible for you . Simple as that . You get your freedom & everyone else doesn’t have to pay for your medicare .

Lil' Barry Bailout

June 8th, 2011
9:38 am

That’s funny, wampum. Now go wash your hands, because that came straight out of your butt!

Chuck

June 8th, 2011
9:39 am

@ wampum

“Why do healthcare insurers spend hundreds and hundreds of millions of our premiums lobbying our so-called representitives in Washington to let them continue their immoral ways of denying people coverage?”

a. Because it is profitable
b. Because they can
c. Because they truly are immoral
d. All of the above

Lil' Barry Bailout

June 8th, 2011
9:40 am

I work in Norway pretty frequently, and they are not thrilled with government healthcare. Like every other government-run system, it is slow and low quality.

Ivan

June 8th, 2011
9:41 am

“Whatever happens in this appeal, this case is most likely headed to the U.S. Supreme Court.”

That’s all anyone really needs to take from the hearing today. The judge in FL ruled it unconstitutional. These judges will warrant it otherwise, and it’ll be taken to the Supreme Court. It’s all formalities at this point.