Employers Monitor Health Care Law Arguments
DAVID GREENE, HOST:
Now, businesses and employers will be among those paying very close attention to this week's arguments inside the Supreme Court over the health care law. And to learn what they'll be focusing on, we turn next to David Wessel. He's economics editor at the Wall Street Journal and a frequent guest on this program. David, good morning.
DAVID WESSEL: Good morning.
GREENE: So let's talk timing here. The Supreme Court won't rule on this case until June. Republicans are talking about repealing this law, if they win big in the election in November. How does all this uncertainty affect, you know, doctors, hospitals, employers, consumers?
WESSEL: Well, a lot of people are waiting to see what happens. Of course, some provisions of the law are in effect and working as designed. For instance, the one that allows people under 26 years old to be covered by their parent's insurance. Others aren't working so well, like the high-risk pools that were designed for people who can't get insurance in the regular market. But a number of the big provisions don't take effect until January 1, 2014. But I think employers and hospitals and doctors in particular are preparing because they can't wait to see how the court or the elections rule, to get ready for something which is really one of the most sweeping changes in social policy we've ever attempted in the United States.
GREENE: We talk about such a sweeping change. I mean, what are some of the specific questions that there's really a lot riding on that the big employers and also state governments are really following closely?
WESSEL: Right. Well, Paul Keckley, who's an expert at this at Deloitte, the big accounting firm, says there are four big questions. One, will the mandate that individuals buy insurance pull a lot of young, healthy, uninsured people into the insurance system to offset the cost of the less-healthy people who are going to get insurance out of this law? Will states actually set up these new markets for health insurance called exchanges? Will the whole enterprise restrain costs, as its proponents say, or will it actually increase costs, as critics say? And one of the most interest questions, how many employers will choose to pay a penalty rather than offer insurance to their workers?
GREENE: And that's a really interesting question. I mean, you hear penalty, you think that that's something that, you know, employers want to avoid. But there has been talk that employers might just decide that paying this penalty is the more viable option than offering insurance.
WESSEL: Right. And one of the reasons it's so complicated is that there are all sorts of cross-cutting changes here. So there is a penalty - $2,000 a worker - on big firms that don't offer insurance. That's the stick. There's also a series of subsidies to smaller employers that do offer insurance. That's the carrot. And then, of course, there are these subsidies, basically vouchers that the government's going to give people who can't get insurance through the jobs to buy insurance at one of these exchanges. Now, about half Americans have insurance on the job already. And the question is, as you say, will some employers decide that, you know, my employees might be better off if I don't provide insurance? I won't have to pay for it. I'll pay the penalty and the government will subsidize the insurance and they buy it. So - but we just don't know how many people, how many employers are actually going to make that call.
GREENE: But they would be trying to make the argument that it would be better for everyone, both them and their employees.
WESSEL: Well, of course they'll make the argument. They'll do it because it's in their interest. But it's not so simple as I'm just going to get out of the business of health insurance because I don't want to pay this tab. Some employers, well-meaning employers, may decide it's both in their interest and in their employees' interest to get out of the health insurance business. That will have a big cost to taxpayers.
GREENE: Well, David, employers don't have to offer insurance now. I mean, is there a case where a company that already offers insurance would actually choose to drop it and pay a penalty after 2014?
WESSEL: There's definitely a case. The question is how many people. There's all these surveys of workers, and some surveys say 20 percent, 30 percent of firms are thinking about dropping coverage. But from what I hear, they're just beginning to think about this project. The experts who consult with companies say that every company is – every big company is beginning to consider their options in ways they haven't before, but none have yet made a decision, which is why it's so hard to predict what will actually happen if the court upholds the law, if the Republicans don't manage to repeal it, and it actually takes effect in January 2014. Almost every prediction about what's going to happen has got to be uncertain because we've never tried anything like this before.
GREENE: All right, David. Thanks for talking to us, as always.
WESSEL: You're welcome.
GREENE: That's David Wessel of the Wall Street Journal.
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