Abbott's White: Employers to scrap health plans under Obamacare
November 19, 2013)
By Peter Frost Tribune reporter
6:31 p.m. CST, November 19, 2013
The chief executive of Abbott Laboratories warned Tuesday that he expects more corporations to drop employee health care insurance as a result of the health care law and some of the taxes it levies over the next five years.
Miles White, an influential health care executive who has led the Lake County-based medical products giant for 15 years, said there are “clear incentives for companies to drop their health care plans and move people onto the exchanges,” referring to the new, online insurance marketplaces created under the Affordable Care Act where consumers can compare and purchase private health plans, often with the help of federal tax subsidies.
“I can tell you that the employees of Abbott or AbbVie (the pharmaceutical firm Abbott spun off in January) are going to be pretty unhappy about that, you know, if we did that,” he told members of the CFA Society of Chicago, an association of investment analysts, at a luncheon.
Companies with more than 50 full-time workers that don’t provide coverage face penalties starting at $2,000 per worker in 2015, far less than the cost of providing coverage.
In 2013, the average employer-sponsored coverage cost $5,884 for individuals and $16,351 for families, according to the Kaiser Family Foundation.
Beginning in 2018, the law imposes a 40 percent excise tax on employee health benefits that exceed $10,200 for an individual and $27,500 for families.
“Do I think it makes sense to tax us for providing a better plan? No. And I don’t think a lot of people are going to like that,” White said.
Although the so-called “Cadillac tax” doesn’t take effect for another five years, many employers already have scaled back health benefit offerings by moving more of them into plans that require higher deductibles and other out-of-pocket costs to avoid paying the tax.
The Obama administration has argued that the penalty will help reduce growing health care costs over the long term because it forces more of the burden to consumers, who will be less likely to get unnecessary and expensive medical treatment.
White also said the law contains several other flaws that could take years to remedy, particularly in an era of hyperpartisanship in Washington.
“I think there’s a good five or six years left of debate and political mess to go, which probably doesn’t lead us to a more cooperative, bipartisan government for awhile because (the law) is such a lightning-rod issue,” he said. “It doesn’t lend itself to patching for fixing. And realistically, you can’t throw out the whole damn thing.”
The early problems with healthcare.gov, the federal website where consumers in 36 states, including Illinois, are supposed to go to buy and compare plans, also could dissuade young, healthy people to sign up in the first year, he said.
“I think we’re in for kind of a mess here,” White email@example.com
| Twitter: @peterfrost