All Animals Are Equal...

Thursday, April 25, 2013


For once, Benjamin consented to break his rule, and he read out to her what was written on the wall. There was nothing there except a single commandment. It read:All animals are equal. But some animals are more equal than others.
George Orwell – Animal Farm

Congress never fails to disappoint. Whether you are discussing financial disclosure and insider trading or just the day to day struggles with the Sequester, our elected officials from both parties seem find the retention of their jobs as their number one priority. And unless you are a total whack job running for the Senate from Connecticut, a major determinant of election success is the campaign war chest. Money gets you to Washington and once you’re there, you sure want to stay.

Like the previously mentioned insider trading issue, Congress has crafted laws that appear to apply to everyone but them. And that brings us to the Patient Protection and Affordable Care Act (PPACA). There was a poison pill buried deep within the PPACA by Charles Grassley (R-IA). While negotiating with the Democrats in the summer of 2009, Grassley pushed for Congress and its staffers to be required to participate in the future health care process. If the PPACA was good enough for the average American citizen, it was good enough for Congress.

Theory meet reality.

Today’s POLITICO reveals the backroom negotiations that have been going on for months to resolve this problem. Congress and their staffers are currently covered by the federal government, their employer. Approximately 75% of the cost of their coverage is paid by the government. The insurance is good. The 75 / 25 split is fair. But an exchange doesn’t work that way.

The health care exchanges will be offering plans that conform to the new plan designs created by Health and Human Services. As this blog has detailed in the past, the new metal plans (platinum, gold, silver, and bronze) will have a lot of benefits that you may, or may not, want. These new benefits and the elimination of medical underwriting will have a significant impact on premiums. The new taxes on health insurance will also add to the escalating prices of individual and small group health insurance.

The first health care exchanges will be designed to sell individual policies and small group health insurance. An employee of the federal government, covered by group health insurance, wouldn’t be shopping at an exchange unless he/she was losing the group policy. BINGO! To comply with the law and reality, Congress and the staffers have to buy their own policies, at their own expense. They may qualify for a tax subsidy if any of them earn less than 400% of the federal poverty rate. But they lose the 75% now paid by their employer.

Senator Richard Burr (R-N.C) is quoted in the POLITICO article as noting the impact. “…put yourself in the position of a lot of entry-level staff people who make $25,000 a year, and all of a sudden, they have a $7,000 a year health care tab? That would be devastating.”

Congress fears a brain drain as young, under-paid employees, untainted by the cynicism years in Washington breeds, leave the Capital for a more affordable start to their careers. And who in Congress wants to pay for his/her own coverage? So Democrats and Republicans are working behind the scenes to exempt themselves and their staffs from the effects of the PPACA.

There is no one working to exempt you.

Businesses, especially those with fewer than 100 employees, are assessing their need to offer group health insurance to their employees. Many will follow the government’s lead and eliminate coverage. Dropping coverage eliminates compliance questions, paperwork and expense. The employees will be left to fend for themselves.

In other words, the PPACA will perform as designed. Less and less Americans will rely on their employers for health insurance benefits. And as we are herded into the exchanges with their ever escalating prices, a great hue and cry will rise from our fellow citizens for rate relief. The transition to a Single Payer System will then appear to be the only solution. Damn near welcome.

Except for those who have been exempted. There is really only one rule: All animals are equal. But some animals are more equal than others.  

DAVE  
www.bcandb.com  

***