The Obamacare "Death Spiral": Health Plans Now Cost Employers More Than A New Car

Tyler Durden's picture

With the Graham-Cassidy Obamacare replacement now officially dead, it appears Senate Republicans will be unable to pass a repeal-and-replace bill before the Sept. 30 deadline announced by the Senate Parliamentarian arrives – though it’s impossible to rule out another long-shot plan gaining momentum in the coming days.

After the deadline, Senate Republicans would need 60 votes for their repeal-and-replace bill, effectively killing the repeal-and-replace effort, at least for now.

As Republicans struggle to fulfill their campaign promises to the American people, the Wall Street Journal has published a report showing that rising premiums are forcing some small business owners to stop offering benefits, the latest sign that Democrats ignored Republican rhetoric about the bill’s job-killing potential at their own political peril.

As we’ve reported time and time again, the bill has increased cost pressures on businesses, forcing them lay off employees or pare back benefits to stay in business.

According to WSJ, the average cost of health coverage offered by employers pushed toward $19,000 for a family plan this year, while the share of firms providing insurance to workers continued to edge lower, according to a major survey by the Kaiser Family Foundation.

Annual premiums rose 3% to $18,764 for an employer plan in 2017, from $18,142 last year, the same rate of increase as in 2016, according to an annual poll of employers conducted by Kaiser and the Health Research & Educational Trust, a nonprofit affiliated with the American Hospital Association.

Premiums for employers have been climbing for several years, though, as WSJ notes, their rise has been slowed somewhat by a shift toward larger out-of-pocket costs for employees in the form of higher deductibles. That move slowed this year, as deductibles were roughly flat, compared with 2016.

Kaiser foundation officials said it wasn’t clear why the growth in deductibles appeared to pause this year. The average general deductible for single coverage among all workers, including those with no deductible, this year was $1,221 – the same as last year, but up sharply from $802 in 2012. This year, 28% of covered workers were enrolled in high-deductible plans that can be paired with savings accounts that aren’t taxed, compared with 29% last year and 19% five years ago.

Drew Altman, chief executive of the Kaiser foundation, said it was too soon to tell if the growth in deductibles would quickly resume next year, or if employers are reluctant to keep pushing the tactic.

“We’ll have to watch it,” Mr. Altman said. “It’s possible it’s playing itself out or reaching some kind of natural limit.”

Still, the rise of premiums over time has resulted in family health plans that can annually cost more than a new car, though often most of the cost is borne by employers. Employees paid on average $5,714, or 31%, of the premiums, for a family plan in 2017, according to Kaiser.

In what should be interpreted as clear-cut evidence of the bill’s job-killing potential, Gary Claxton, a vice president at the foundation, said that the overall cost of insurance appears to be driving small firms, particularly those with low-wage workers, to stop offering health benefits. Indeed, among small employers that didn’t offer health insurance, 44% said the biggest reason for not providing the benefit was its cost. “It’s harder for them to maintain coverage when it’s so expensive,” Mr. Claxton said.

However, among small employers that didn’t provide health coverage, 16% did give workers some money they could use toward purchasing a plan themselves.

None of this should surprise readers, as we've been writing for years that the entire Obamacare system is on the "verge of collapse" as premiums soar, risk pools deteriorate and insurers were pull out of exchanges all around the country leaving many Americans with just a single 'option' for health insurance.

Meanwhile, for an individual worker, the average annual cost of employer coverage was $6,690 in the 2017 survey, up 4% from last year, with employees paying 18% of that.

In another troubling trend highlighted by WSJ, the number of employers offering health insurance as a benefit to employees has been declining even as the labor market has purportedly been tightening. This appears to jive with stagnant hourly earnings, which have shown little movement as most of the new jobs being created in the US are low-level, low-skill and low-pay.

The Kaiser survey was conducted between January and June of this year and included 2,137 randomly selected employers that responded to the full telephone survey.
 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
east of eden's picture

YEah, well, when you have billionaires determined to undermine something, it is hard to stop them. That is why we used to have high taxation levels on them, to keep them in line.

red1chief's picture

Their tax rate doesn't matter as much as their monopolies. Tax them more and they will just keep jacking up prices unless forced to compete.

GUS100CORRINA's picture

The Obamacare "Death Spiral": Health Plans Now Cost Employers More Than A New Car

My response: OBAMACARE is bleeding the NATION DRY.

OBAMA and all LEGISLATORS should be forced to use OBAMACARE!!!

Bes's picture

this is not an obamacare problem, this is way fucking bigger than that

NOTHING will fucking change

as long we are a fucking captive market

is an fucking oligopoly

run by fucking drug and medical corporations that can

charge whatever the fuck they want

for as much profit as they want

and no one in Congress (except a tiny few) or Trump in the White House wants

to do a fucking thing to change that fundamental structure

#maga

 

J S Bach's picture

How many times throughout history must patterns be shown to convince an intelligent electorate what works and doesn't work?

Oh, wait... I wrote "intelligent".  I guess this is why (((they're))) doing their damnest to import as many stupid 70-IQ, unthinking, imbecilic idiots into this country as possible.  Now I get it.

swmnguy's picture

The healthcare finance cost spiral was a problem before 1973, when the Nixon Administration introduced HMO plans as their solution to what was already a clear threat.  1973.  Not 2009 or 2014.

Obamacare was merely the latest Band-Aid applied to a sucking chest wound, as the charts all make quite plain.  

Every attempt to address US healthcare finance has tried to maintain the system of private insurance and corporate clinics, hospitals, pharmaceuticals and device manufacturers.  Every new initiative has resulted in a continuation of the price spiral, to the point that a critical mass of Americans and their employers cannot pay for coverage.  At the most recent crisis point, ObamaCare had the Federal Government step in to pay the premiums most cannot pay.

The most recent travesty proposed by the GOP would have done nothing to improve the system or rein in costs, but would have simply abdicated Federal responsibility and forced the States to decide whom to cut off and deny access to.

One can only try the same thing so many times, getting the same results, before concluding that maybe the problem is the fundamental approach.  Maybe the corporate finance model doesn't work when applied to health care, because there is asymmetry of information and freedom to walk away from a bad deal.  Same applies to education, and every aspect of basic survival.  If one or both parties cannot walk away from a deal, there's no real market.

Buckaroo Banzai's picture

"Health" is an uninsurable risk. We create larger and larger bureaucracies to "solve" the unsolvable problem; why are we surprised that costs keep accelerating?

It's like trying to put a fire out with gasoline.

Hal n back's picture

I know larger employers self insure health care and do the administrative work in house or pay a fee as a % of claims to a third party administrator.

I would think That would keep a lot of the cost out of their system, as they only pay for their employees and not have to be part of Obamacare subsidy (or Medicaid subsidy except for income taxes which the big companies financial engineer away anyway).

Hence this study is not accurate and indeed the larger companies do have a great advantage over the smaller companies which cannot self insure.

Any ideas?

 

hedgeless_horseman's picture

 

Main Street is paying for Wall Street, K Street, and MLK Blvd, respectively: bonus pools, swimming pools, and risk pools.

Oldwood's picture

Fuck 3%

I pay 100% of my employee insurance and it just went up 23% and deductible went up another $500 to $6550, with ZERO copay till deductible is met.

The insurance companies are complicit in crashing healthcare so that no one can afford it and the government is "forced" to step in. The heads of these insurance companies could care less as they already have cashed in.

junction's picture

Don't just blame the insurance companies.  Many non-profit hospitals have top executives who earn 7 figure salaries, salaries unheard of twenty years ago.  Prescription drug prices have sky rocketed, mostly due to price fixing and an FDA that is owned by Big Pharma.  Finally, and most importantly, Americans are getting sicker and sicker due to illegal drug usage, alcoholism, depression and the poisoned environment (toxic food additives like aspartame, fluoridated water and air poisoned by chemtrails).   Life is tough all over.

seek's picture

Yes, this goes way past insurance companies. Those hospitals also have occupancy rates that are unbelieveably low, but they keep building because revenues are proportional to beds -- even empty beds. In the US it's currently 62-64%. Those beds still have to be paid for -- not to sing praise for nationalized healthcare, but the UK rate is 92%.

That, along with drug costs and more importantly lifestyle diseases from people hell-bent on killing themselves but equally hell-bent on not dying with everyone else paying for their treatment, and you pretty much can explain the whole healthcare cost problem.

Penalize empty beds (e.g. make empty hospitals less profitable so they go under rather than supporting them by doubling costs), go after anticompetitive drug practices (especially anything that keeps out-of-patent generics off the US market), and means-test care by bodyfat percentage and usage of tobacco/alcohol/drugs (e.g. come in with a heart attack at a 40% BMI, you get aspirin, not a bypass) and the problem is fucking solved. You'd also pick up a little savings not by denying ER care to anyone, but if you're enter a US ER and your not a legal permanent resident, you're discharged onto a bus home.

Think of the average blue-collar working american, outside of a few of the heavier ones, none of them would be impacted by these changes at all other than lower cost, and the white collar crowd would benefit as well. Freeloaders, not so much.

michigan independant's picture

The health care cost push is the vaunted fed inflation target. They own it all from analog to digital means of cartelization production means.

1936ryer's picture

Have the fucking billionaires pay for everyone's health care -- that is a tax I would vote for.

 

Oldwood's picture

You mean the same billionaires who OWN the insurance companies?

wisebastard's picture

well fuck....HRC should have just ran on that......fuck health care, get a car.....

wisebastard's picture

im telling you the moment i heard obama's health care plan was called the Affordabel Care Act...i knew it was not going to be Affordable....

Implied Violins's picture

Know what though? There really IS a silver lining in all of this.

I work for a government agency, so my healthcare is covered by my union agreement. But: I found that Kaiser just can't do anything for my physical problems, which are mostly allergy related.

...so I went to a Chinese herbalist/acupuncturist. My insurance doesn't cover them, but at $250 a month for treatments and herbs, it's a steal as it WORKS.

Alternative medicine works for me, and I know a lot of other people who are so fed up that they tried it, too. I know a lot of people who completely GAVE UP THEIR MEDS and felt a LOT better once they left the Medical Industrial Complex.

I know that the ultimate goal of these psychopaths is basically to make everyone turn to 'single payer' - where the insurance companies will pay for treaments - but *only practitioners on their lists*, which means NO alternative doctors whatsoever.

My hope is that enough people will have transitioned to them before it all crashes, that it just doesn't matter - and REAL HEALING programs will finally begin.

Mazzy's picture

In the rest of the world it's not called "alternative" and people are generally healthy.  I haven't seen a doctor in years, but my employer pays assloads for some healthcare coverage (which if I use the insurance companies don't pay a cent anyway).

No big pharma, not a single damn pill.  Exercise.  Use herbs in cooking.  Smoke a small amount of weed.  My GUT tells me that raw Garlic and Mushrooms are the cure for a heck of a lot of what ails ya.

ky8's picture

+1 for the raw garlic plug.

CharmingOne's picture

Amen Brother IV!

I had noticed a general decline in my own health, while taking blood pressure and anti-inflammatory meds...so much so that I began looking at the side effects and history of the current cohort of common pharmacueticals, and came to the conclusion to stop taking them all---immediately!  Know what?...haven't felt better in years!! blood pressure in normal range and energy levels remarkably higher.  I think the over-medicated state of the general populace is a disgrace and an important component in the "residual need" of continuing "healthcare".  Oh....I almost forgot---I also supplement my health by taking out my favorite Silver Dollar City shot glass, filling it halfway with with Apple Cider Vinegar--then top it off with water.  Tastes nasty, but the health benefits for me are manifest! 

I appreciate your insight sir!

Francis Marx's picture

Well it will be interesting to see it crash and burn. You know they will never pass a bill to overturn it.

undertow1141's picture

Insurance is a racket just like the mafia. It would make more sense to make it easier for patients to fianance their bill than forcing the healthy to pay for them. Why are sick people not obligated to pay for their own care?

Yen Cross's picture

 Welcome to stagflation and the "death throws" of helicoptor $ - € - ¥ - £ -  ƒ

 Bitchez

WhackoWarner's picture

Think that USA needs to seriously look at the medical plans that have been functioning in many other countries. 

I know very well the objection will be 'SOCIALISM'.

However these plans have funtioned for decades to the benefit of all income levels.  The insurance companies get a kick at it on supplemental coverage. Dental and extended care and drug plans etc.

And believe me the big bucks are fighting to privatize it all like good old USA.  Trying to dismantle universal coverage and go for profit.

 

IN UK, FRANCE, GERMANY, MOST OF THE WESTERN WORLD  nobody has to fear going into an emergency ward for something small or large.  There are variable personal costs for ambulance services that can really be a hit.  But having a heart attack is bad enough without having to worry about some co-pay or deductible. 

 

USA should demand that their tax dollars catch up to the rest of G-7 OR MORE.  Great part of this world does not worry about many of the costs of illness.

 

Friend of mine is totally frigged up.  Has type 1 diabetes.  Has some phantom spinal injury.  Had absolute disintegrating knee.  it has been a financial hardship only in the consideration of travel expenses to locations for special treatment.  To date has had 2 spinal procedures to try to cure constant pain. Has had his knee reconstructed. Has had consistent care for 5 years or more to manage pain. Has had numerous scans, MRI's, numerous consults with specialists. 

Charge to him has been nothing beyond he legitimate cost of travel and abscence of home care support in this case.  Still costs.  But I cannot imagine what the bill would be in USA.

 

Was transported via ambulance back to hospital today as he cannot manage the pain further.  And he avoids heavy opiods.  But likely has no choice at this point.  Like;y in USA his care so far would have cost hundreds of thousands.  Here it has cost his medical premium which is being eliminated as a point of the last provincial election.  In Canada most provinces have eliminated the medical premium ( here? I guess it is perhaps $80/month but do not really know as I have not paid it in decades due to a union plan....)

 

IF USA is so rich why is basic health care not provided via tax dollars?  Spending tax dollars to preserve the health of the taxpayers is not socialism. IT is directing the taxes to the benefit of the taxpayers.

DisorderlyConduct's picture

Directing the taxes that some pay and turning it into benefits others receive. Each according to his ability, each according to his need, eh? ^_<

Your friends eating someone else's cookies. Which is nice when you're the receiver I guess.

Danielvr's picture

A simple measure could make Americans healthier and greatly reduce their costs of healthcare and insurance: Multiply an individual's monthly insurance premium by (BMI/22).

DaveA's picture

If your friend lived in the US, he would probably get better care. His *bills* would be in the millions of dollars, but no one would seriously expect him to pay them. They'd invite him to apply for "financial aid" to see out how much they can soak him for, but if he has no job and no non-essential assets (e.g. a home and a car), he would qualify for free care.

How can hospitals afford this? Easy, they raise the rates they charge insured patients, thus causing the cost of insurance to explode 30% per year. They also get some government subsidies for uncompensated care.

As ever more poor people use the hospital ER for all their health-care needs, hospitals will have to charge admission at the door or go out of business.

There's already a lot of socialism in America, such that the easiest way to defeat it is to surrender, stop paying taxes, go on the dole, and bleed it bankrupt.

Intelligence_Insulter's picture

Obamacare is costing me 700 bucks this year. Unconstitutional nigger tax. Trump hasn't done shit about this.....

undertow1141's picture

Trump has done all he could (not enforcing the penalty or requiring you verify coverage on your tax return)through non-enforcement, it's the GOPe that are shoving this further down America's throat while sitting with their thumbs up their asses.

Bigly's picture

My portion ('contribution') of the premium is 840.00 a month....for me. Family premium was a ~27k a year (wtf)

This is a BLX PPO group plan with a 1500 deductible for an individual.

So just to have insurance, I am paying 10k a year for an employer's plan PPO, not even obamacare.  And there are office visit copays and coinsurance if I actually go to a doctor...

I give this sucker 2 years before it implodes.  This is not sustainable.

I want a true catastrophic plan with single deductible of 15k before it kicks in . Monthly premium not to exceed 150/mo.  I will pay for office visits.

This is bullshit.

buzzkillb's picture

There are some serious gotcha things with ACA. At this point I don't care anymore, but people having babies might be in for an ass kicking if it doesn't go completely right.

Its my small business owner friends seeing how screwed up ACA is as well. Friend says he is seeing his insurance might go to over $2k for him, wife and 2 kids next year. Sounds affordable right? A lot of small businesses will be killed off shortly.

undertow1141's picture

Honestly at this rate it would be cheaper to drop insurance alltogether and put that money in a jar to pay your own medical bills if you don't see a doctor regularly. It's almost more affordable to use a credit card.

Pernicious Gold Phallusy's picture

Yes, that's true. But Obamacare was designed to steal your money and give it to poor people who are even too shiftless to sign up for free insurance.

Bigly's picture

Yes, agreed...to a point.

It is that 'hit by a bus' factor though that needs insurance. The not frequent, rare, but if it happens your hospital bill will take you down kind of bill..even if you are able to negotiate a lower bill it it still staggering.

Example: Did you know premie twins in ICU for a few months exceeds 2000000?

People need to be more accountable for their health and insurance needs to be just that. INSURING AGAINST CATASTROPHIC LOSS. Anything else is dollar shifting. Preexisting condition coverage wrecks the whole concept and introduces having to have others foot the bill for other people's conditions.  That is why a true catastrophic option needs to be there. A completely different risk pool for people who will self insure themselves to a point. So if they are hit by a bus they don't lose everything they worked for their whole lives. That is what you need. Cheap, and will cover the huge bill.

ebworthen's picture

Repeal the individual mandate!

Flush that turd!

platyops's picture

Why would one person be required to pay for someone else's health care?

There is no free lunch and someone always has to pay. So why not the person incurring the bill not be responsible for the payment of such?

Something is not right in America.

 

There is no free health care!

Bigly's picture

Too many people are too stupid to understand that concept.

PiratePiggy's picture

> "Why would one person be required to pay for someone else's health care?"

 

Q. ) Why would one persone be required to pay for someone else' cell phone?

 

A. ) Because Obama cares. "Keep Obama in President, you know. He gave us a phone"

https://www.youtube.com/watch?v=tpAOwJvTOio

 

 

 

maxwellsdemon's picture

Obamacare is designed to ration healthcare for the middle class, while having the middle class subsidize it completely for the lower class to earn all their votes (thus 'legitamizing' via democracy what is immoral, AND have the middle class pay the bonues and profits of the banksters who own the health care/pharmaceutical/medical device companies.   Bottom line, is to destroy the 'petty bourgeosise', as the kulaksk were in the USSR, and turn the government completely over to the bankster/communist oligarchs from the olilgarch Jews.  The goys are being slow roasted as usual and are being warned they will be fired or jailed for 'hate speech' if they complain.  That was the purpose of the Jews running the Antifa, KKK hoax wars; 'problem, reaction, solution', by creating a conflict where none existed, and to pose their desired solution (banning speech critical of the Jews).   You are beginning to experience what the Germans went through in the 1920s under the Nazi's (the US is a fascist state not a commuinist state but all the same is run by the same oligarch Jews that ended up running the USSR in the 1980s and ended up owning the remnants of the USSR in the 1990s. 

The only good news is that the Russians threw them out.  We can too. Not literally throwing them out, but by returning to gold as money.  I will add my two bits (sarc) that bitcoin is not a solution for money, because bitcoins become more exponentially more difficult to mine than past ones did, hence more energy is needed, hence bitcoins are always going to gain value.    Bitcoin may be (and has been and will be for the next few years) the worlds greatest investment, but it is not money.  It is certainly useful to evade currency controls.  But an ounce of gold mined today has the same amount of ENERGYas an ounce of gold mined 10 years ago, or 10 years from  now.  Thus gold is the proper form of money, since future gold can be reliably mined and exchanged to satisfy contracts in the future. 

White Devil's picture

Great Wall of Text.
Bitcoins are Shitcoins

maxwellsdemon's picture

thanks!  However I need to correct the sentence "what the Germans went through in the 1920s under the Nazi's" to "what the Germans went through in the 1920s under the Jewish controlled Weimar republic".  What the Germans went through in the 1920s led to Naziism, which is the wrong solution. Putin's nationaliostic revival and China's desire to create gold backed trading currency are the solutions we need in the US

helloimjohnnycat's picture

" what the Germans went through in the 1920s under the Jewish controlled Weimar republic ".

Now you got it.

 

Pernicious Gold Phallusy's picture

You have hit the nail on the head. Obamacare is to fuck the middle class and transfer their wealth to the upper and lower classes.

PiratePiggy's picture

It is a lot like Obama's QE  & expanded social program combination in that regard... the one-two punch to the middle class.

bankbob's picture

Under ObamaCare we are paying for someone else's plan while being charged 'extra' through $6000 deductibles for actually using it ourselves.