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Obama health plan would raise coverage, some employer costs

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in Employee Benefits Program,Human Resources

President-elect Barack Obama has said his plan for universal health coverage would reduce health care costs and save American businesses $140 billion a year.

A new analysis by PricewaterhouseCoopers’ (PWC) Health Research Institute predicts Obama’s plan would likely reduce the number of Americans lacking health insurance by about two-thirds.

It would do so largely by requiring big businesses to provide health insurance for their workers or else pay into a federal fund that would provide coverage. That could lead to higher costs for some employers.

Obama’s strategy to reform the American health care system requires all employers except start-ups and very small businesses provide coverage for their employees. It also contains a number of other requirements for businesses. Among them:

  • In what’s known as a “pay-or-play system,” large employers would have to offer “meaningful coverage or make a meaningful contribution to the cost of quality health coverage” for their employees. Those that do not will have to pay an unspecified percentage of their payrolls toward the cost of a national plan.
  • Small businesses that can’t afford to cover their employees would get tax subsidies to offer health insurance.
  • A reinsurance subsidy would help employers pay catastrophic health care costs if they use the money to lower employee premiums.
  • The plan promotes workplace wellness programs and requires coverage of preventive services such as screenings and smoking cessation.

PWC estimates the Obama plan would cut the number of uninsured in the U.S. by 30 million people. The added coverage could lead to healthier workers and higher productivity, the report says.

The study estimates that 38% of the newly insured will get their coverage through work, and that most of the gains in coverage will come from small employers.

Without a national plan, PWC cautions, states could impose their own health care reforms, which could be cumbersome for businesses that operate in multiple states.


By the numbers: No insurance?

More than a third of U.S. employers—mostly those with fewer than 500 employees—do not sponsor an employee health plan. Here are their reasons:
Can’t afford it                                                43%
Employees have coverage elsewhere          20%
High workforce turnover                               9%
Employees want higher pay instead           9%
Source: Mercer National Survey of Employer-Sponsored Health Plans


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