The Sad Case of the Patient Protection and Affordable Care Act

[LynahFan]

Re: The Sad Case of the Patient Protection and Affordable Care Act

Let us know when the market changes. Until then your premise is textbook and not reality.

It's not my premise. I don't care to look back to see who it was, but some liberal-leaning poster hypothesized that if employers no longer paid health care benefits, then they would be able to pocket 100% of that expense as additional profit. I'm simply disagreeing with that position - I think a fair chunk (not 100%) of that would end up flowing to employees as higher wages.

[FlagDUDE08]

Re: The Sad Case of the Patient Protection and Affordable Care Act

It's not my premise. I don't care to look back to see who it was, but some liberal-leaning poster hypothesized that if employers no longer paid health care benefits, then they would be able to pocket 100% of that expense as additional profit. I'm simply disagreeing with that position - I think a fair chunk (not 100%) of that would end up flowing to employees as higher wages.

They'd certainly be able to do so. Would it benefit them in the long run? Well, if there's heavy competition for the person's services, I'd think not.

[sagard]

Re: The Sad Case of the Patient Protection and Affordable Care Act

It's not my premise. I don't care to look back to see who it was, but some liberal-leaning poster hypothesized that if employers no longer paid health care benefits, then they would be able to pocket 100% of that expense as additional profit. I'm simply disagreeing with that position - I think a fair chunk (not 100%) of that would end up flowing to employees as higher wages.

It really depends on the competition of that job. For 80% of the jobs out there people can be easily replaced during times of 9% unemployment. That big chunk of jobs will see little to no wage increase.

For the jobs that are currently in demand and companies have to compete to fill, yeah they will see nice wage increases. But they are seeing them either way.

The only way we will see real wage increases is if the unemployment rate drops dramatically.

[FreshFish]

Re: The Sad Case of the Patient Protection and Affordable Care Act

I suspect wages would increase but not exactly commensurate with the loss of the monetary value of benefits. Figure the cost to my employer for my services, all things considered, is currently the sum S + H + O of my salary S, their share of my health care costs H, and other costs O that don't show up in my salary but aren't health insurance-related -- the cost of keeping the lights on in my office, for example.

Right now they pay me S. All other things being equal, if I suddenly assume all my health insurance costs they "should" pay me S + H, since my value to them hasn't changed. The reason I think they will wind up paying me somewhat less is that (1) psychological valuations of appropriate salary won't immediately jump the full H right away, and (2) I suspect my company makes back some of the H on the back end from tax adjustments (already borne by me, as a tax payer, and in effect a hidden benefit of the current system extended by me to my employer).

I think health insurance should be decoupled from employment for practical and humanitarian reasons, but I don't think it's overly pessimistic to think employers won't be able to pocket a considerable sum in the process that won't be remitted as salary adjustment, at least in the transitional period but I suspect permanently. I don't see it as likely that all employees will walk into their HR departments the morning of the switch and demand their salaries all go up by H or they strike. As always, the guy who is playing with money as an investment game has the big advantage over the rest of us who need to eat.

Considering that H is a blended rate across all employees, it also would not be feasible to break out H for each individual person. Your analysis at least has some reasoning behind it.

Also, I don't think people like LynahFan have been saying that it is a deliberate process, in which employees go into HR and "demand" a raise. Their arguments are more along the lines of "if an employer has more cash flow available than before, and if an employer has a need to attract or retain key people, then wages [only for] those key people will be bid up until the after-tax cost of employee wages + benefits will be about the same after as they were before." That is a reasonable viewpoint, especially as hiring managers already look at the total incremental cost of a potential new hire. Any competitive hiring (or retention) process uses the value of the entire benefit package as a selling point; for skilled positions, no one recruits, and no one accepts, based solely on salary anyway.

Some respondants to that argument have ignored the nuance by ridiculing the notion that wages would go up across the board, which no one actually did say.

[brookyone]

Re: The Sad Case of the Patient Protection and Affordable Care Act

Has there ever been an instance where the big companies voluntarily increased wages at the expense of profit? Right now there is no supply problem. That is why the worker benefits are decreasing everywhere. Mr Les carries our health insurance. Our expenses have gone up 500% (no, not exagerating). All over the expenses are going up and the employer contribution is going down. This is something everyone is wailing about on the news. No employer is eating the expense to keep workers that I know of. Whether they are carrying it or I have to doesn't make any difference. The $ are the same and supply demand hasn't made a bit of difference to anyone I know. Of course I am only one person.

Identical experience here, albeit, small / privately owned business...with a few years of 100% of increases passed to employees sprinkled in. With health care benefits simultaneously going south. In my industry this has been the norm among the industry related small companies, for many years actually. Some exception for unionized employees, per employer contribution aspect.

[Rover]

Re: The Sad Case of the Patient Protection and Affordable Care Act

I smell desperate backtracking here out of our righty friends. Nobody to my knowledge said employers would pocket 100% of the savings from not offering health care. What myself and others have said is that employers would pocket the vast majority of those savings and that employees would most likely be at the short end of the stick as the small raises they'd get would not cover the cost of finding their own insurance.

[LynahFan]

Re: The Sad Case of the Patient Protection and Affordable Care Act

I smell desperate backtracking here out of our righty friends. Nobody to my knowledge said employers would pocket 100% of the savings from not offering health care. What myself and others have said is that employers would pocket the vast majority of those savings and that employees would most likely be at the short end of the stick as the small raises they'd get would not cover the cost of finding their own insurance.

In which case owning a business would be ridiculously easy because you'd practically be assured profitability, right? So will there be more or fewer businesses starting up and remaining in business (not going bankrupt) under your scenario? If more, then will the demand for employees be going up or down? If up, will that cause wages to increase or decrease over time?

The notion that you could change one thing as drastic as killing off employer-paid health insurance without having any substantial impact on any other aspects of the market is simply preposterous.

[duper]

Re: The Sad Case of the Patient Protection and Affordable Care Act

It isn't until you disposition it (typically by selling) that it is then worth something.

Out of curiosity, is this the real word for this? I really don't know, but I'm going to be seriously irritated. I can't remember whether it's Alaska or Colorado, but in one of them you hear about "certificated" teachers.

[Rover]

Re: The Sad Case of the Patient Protection and Affordable Care Act

In which case owning a business would be ridiculously easy because you'd practically be assured profitability, right? So will there be more or fewer businesses starting up and remaining in business (not going bankrupt) under your scenario? If more, then will the demand for employees be going up or down? If up, will that cause wages to increase or decrease over time?

The notion that you could change one thing as drastic as killing off employer-paid health insurance without having any substantial impact on any other aspects of the market is simply preposterous.

But its no longer the employers problem. As several other posters have repeatedly told you, the job market now and for the foreseeable future is that the employer has the leverage. Not sure about the straw man you're trying to construct in your first sentence (where did I say running a profitable business is easy due to assured profitability )? However getting back to the point, most likely employees get a small raise and then employers tell them "we're out of the insurance business. Since the gubmint passed that law, its now the gubmint's problem to find you coverage." Like it or not, its real easy to do that since it would take enacting a law to get corporations off the hook. The government passes the laws, so the govt would be looked to, rightly or wrongly, to find coverage for these people. That's a far more likely scenario than employers kick 50-100% of savings back to their workers to go find their own insurance. What are you going to do in this job market, quit? Then you still don't have coverage, but you're also out whatever salary they were paying you.

[LynahFan]

Re: The Sad Case of the Patient Protection and Affordable Care Act

But its no longer the employers problem. As several other posters have repeatedly told you, the job market now and for the foreseeable future is that the employer has the leverage. Not sure about the straw man you're trying to construct in your first sentence (where did I say running a profitable business is easy due to assured profitability )? However getting back to the point, most likely employees get a small raise and then employers tell them "we're out of the insurance business. Since the gubmint passed that law, its now the gubmint's problem to find you coverage." Like it or not, its real easy to do that since it would take enacting a law to get corporations off the hook. The government passes the laws, so the govt would be looked to, rightly or wrongly, to find coverage for these people. That's a far more likely scenario than employers kick 50-100% of savings back to their workers to go find their own insurance. What are you going to do in this job market, quit? Then you still don't have coverage, but you're also out whatever salary they were paying you.

Sigh. Open your mind. You're only thinking about what would happen in the first week after the govt gets rid of employer-provided insurance. If healthcare cost is (just guessing) around 10% of companies' expense and most successful companies operate at around 10% profitability, do you really think it would be sustainable in the long-term for companies to maintain double their profitability?

[Rover]

Re: The Sad Case of the Patient Protection and Affordable Care Act

Sigh. Open your mind. You're only thinking about what would happen in the first week after the govt gets rid of employer-provided insurance. If healthcare cost is (just guessing) around 10% of companies' expense and most successful companies operate at around 10% profitability, do you really think it would be sustainable in the long-term for companies to maintain double their profitability?

Don't get me wrong. I don't mind the theory. Its far more thoughful than a lot of stuff we get out here. My bottom line is unless you legislate it (and I'm not sure of your views on that) I believe in practice employers will take most (as in over 50%) of the savings. So, they won't be doubling their profits in your example, but they will be enhancing them because of this. Call me a pessimist but I don't trust that corporations will completely do the right thing. I don't even blame the corporations. Their job is to take care of ownership first and foremost. Lets say they split the difference (50% to employees, 50% to profit or whatever). I still see that leaving the worker worse off as they now have to find a presumably comparable plan with only 2/3rds of the money they had previously to pay for coverage (1/3rd worker, 2/3rds employer formerly, now the employer gives 50% of their 2/3rds back to the worker).

[FlagDUDE08]

Re: The Sad Case of the Patient Protection and Affordable Care Act

Out of curiosity, is this the real word for this? I really don't know, but I'm going to be seriously irritated. I can't remember whether it's Alaska or Colorado, but in one of them you hear about "certificated" teachers.

I've been working in the DoD business for too long; I hear that all the time. You are correct in that it is not a verb. It isn't until you dispose of it...

[FlagDUDE08]

Re: The Sad Case of the Patient Protection and Affordable Care Act

Sigh. Open your mind. You're only thinking about what would happen in the first week after the govt gets rid of employer-provided insurance. If healthcare cost is (just guessing) around 10% of companies' expense and most successful companies operate at around 10% profitability, do you really think it would be sustainable in the long-term for companies to maintain double their profitability?

Asking a left-winger to look beyond his/her nose is like asking Rosie O'Donnell to only eat a salad at Country Kitchen Buffet.

[leswp1]

Re: The Sad Case of the Patient Protection and Affordable Care Act

Sigh. Open your mind. You're only thinking about what would happen in the first week after the govt gets rid of employer-provided insurance. If healthcare cost is (just guessing) around 10% of companies' expense and most successful companies operate at around 10% profitability, do you really think it would be sustainable in the long-term for companies to maintain double their profitability?

One thing you may not be considering- If you are buying insurance in a group setting (ie employer buys it) your risk is distributed and the cost goes down considerably. As anyone who has tried to buy an individual plan will know the cost when buying individually is much higher. An example- my Fa-in-law tried to buy the insurance from the same provider we had a few yrs ago. For less covg than we had he was going to pay >800$ per person for him and one other employee a month. We got a better plan for less than half of that. Group rates are always sig lower because a group has bargaining power and risk is distributed over the cohort. I can't tell you how many times I have seen people who can't leave their job because to do so would put them out of the market for insurance with or without pre-exsisting conditions.

Is there a remedy for this in the plan you are proposing?

[FlagDUDE08]

Re: The Sad Case of the Patient Protection and Affordable Care Act

One thing you may not be considering- If you are buying insurance in a group setting (ie employer buys it) your risk is distributed and the cost goes down considerably. As anyone who has tried to buy an individual plan will know the cost when buying individually is much higher. An example- my Fa-in-law tried to buy the insurance from the same provider we had a few yrs ago. For less covg than we had he was going to pay >800$ per person for him and one other employee a month. We got a better plan for less than half of that. Group rates are always sig lower because a group has bargaining power and risk is distributed over the cohort. I can't tell you how many times I have seen people who can't leave their job because to do so would put them out of the market for insurance with or without pre-exsisting conditions.

Is there a remedy for this in the plan you are proposing?

And those with good health and don't need a whole bunch of pills and stuff and getting screwed over by those that do. That's what happens with group rates.