Wednesday, December 28, 2011

Administration Report Reveals an Inconvenient Truth: Employers WILL Drop Coverage

On Wednesday, the Administration released a brief report claiming to take success for expanding access to coverage through SCHIP.  The Administration’s talking point regarding the report was that 1.2 million previously uninsured children gained coverage through the government-run program.  However, a Washington Post story on the report included this interesting fact, which the official HHS report conveniently omitted:

In addition to the 1.2 million newly insured children, 3 million children who formerly had private insurance were picked up by [S]CHIP or Medicaid over the same period.

In other words, for every child who obtained new coverage through the SCHIP program, an additional 2.5 children DROPPED their private coverage to obtain subsidized insurance courtesy of federal taxpayers.  This sky-high “crowd-out” effect – in which individuals drop private coverage to enroll in a government-funded plan – shows just how attractive Obamacare’s lucrative insurance subsidies likely will be to both employees and employers beginning in 2014.

But the same Administration that just released a report showing that only two in seven of the newly enrolled in SCHIP were previously uninsured continues to assert that employers will not drop coverage en masse.  They maintain this position despite the numerous studies, papers, briefs, reports, employer questionnaires, consultant presentations, surveys, op-eds, interviews, quotes, and comments from other prominent Democrats suggesting that employers will drop coverage in numbers far greater than the White House lets on.  However, this week’s report – or, more specifically, the crowd-out numbers that HHS decided to omit from the report – reveal the inconvenient truth this Administration has yet to admit: Employers WILL drop coverage, and the cost of Obamacare will explode as a result.