Byron York: Employers Dropping Coverage Will Lead To A Single-Payer Health Care System

Byron York is out with a new column touting an employer survey which found that some businesses will stop offering health insurance coverage as a result of the Affordable Care Act. He argues that this so-called employer “dumping” of employees into the new exchanges is all part of a Democratic conspiracy to move the nation towards a single-payer health care system:

So when it takes effect in 2014, the law will give employers a choice: Continue to offer increasingly expensive health coverage, or pay a relatively small fine, save a lot of money, and let employees buy their own subsidized coverage on the exchange. The incentive seems pretty clear.

Now, it should surprise no one that more and more companies are exploring the possibility of dropping their employee health coverage in 2014. A new study from the benefits-consulting firm Towers Watson finds that nearly 10 percent of midsized to large companies are seriously considering doing just that, and another 20 percent are thinking about it. Still others don’t know. “Many are uncertain how they will respond to the looming impact of state-based insurance exchanges in 2014,” says Towers Watson.

How many companies will actually drop their employee coverage? It’s impossible to say. But from the latest surveys — the Towers Watson report is just one of several that have found employers contemplating the move — it’s safe to say that some will, and more could follow….He couldn’t pass a single-payer system, or even a public-option system, even when he had filibuster-proof majorities in Congress. But he could enact a system that will take a slower route in that direction.

Employers have been dropping coverage since before the ACA became law and will continue to make changes after. What’s important is that academic studies and real world experiences with mandate policies have shown that health reform will have very little impact on coverage rates. For instance, when Massachusetts employers were working to comply with Romneycare in 2006, they were given a choice between paying a very low penalty or continuing to offer coverage. The majority of businesses decided that health benefits made up an important part of their compensation package and continued to provide the service, so much so that the number of employers with coverage increased since the law passed. Massachusetts ESI (employer sponsored insurance) rates are higher than the national average.


This is because employers aren’t only looking at the cost-benefit of offering coverage or paying a penalty. They’re considering the long history of using benefits to attract top-tier employees, the burden of increasing employees’ wages to make-up for the benefit loss and a whole host of other factors. As the Urban Institute has concluded, “[T]here is little scope for firms being able to save money from dropping ESI coverage except perhaps in firms where most workers have low wages as well as low family incomes, and these types of firms are the least likely to offer ESI today.”

But what’s particularly rich about York’s argument is his new found love for employer based insurance. Remember that this critique is emanating from the very people who just two years ago rallied around proposals to eliminate the employer based system entirely by converting the federal tax subsidy for employer-sponsored benefits into a tax credit for individuals and families to go out and buy coverage on the individual market. Now, they’re using the prospect of that erosion to stroke fears of yet another government-takeover.