About a year ago, we wrote about Preference Cascades:
"in which people who have been obliged to conceal their true beliefs by social pressure or sheer force suddenly discover that a lot of other people feel the same way."
This concept holds true not just for individuals, though, but also for businesses (and business owners).
A few days ago, Bob wrote about a recent survey which predicted that "up to 30% of employers may cease to offer health insurance to their employees" come 2014. The impetus for this exodus will be the Exchanges, wherein employers will be able to offload health insurance to that government program.
Today at lunch, my friend Tom remarked that he thinks that number is just the tip of the proverbial iceberg. That is, only about a third of employers today, some 3 years out, claim they'll be dumping their group plans. But Tom thinks that once this initial group sheds their health insurance onus, many, many more will follow suit.
In this case, the Preference Cascade would go like this: large corporations, which tend to strategize in 5 (or more) year increments, see the writing on the wall. They know that they can divest themselves of an expense which is almost impossible to control, with numbers that are nigh unto impossible to predict, and which involve many additional dollars and man-hours in admin costs. For them, 2014 is almost literally around the corner, and they can easily plan to put that expense back onto their employees (and the government).
So a third are already planning for this, and Tom thinks at least one third more will jump onto the bandwagon. And why not? After all, if you're an "early adopter" then it's possible that some of your employees will look for jobs at one of your competitors that still offers group coverage. But there will be (at least) two major hurdles: first, if we're correct (and I think we are), then the Preference Cascade will have already begun its work, and there will be far fewer employers offering coverage. Couple that with continued high unemployment, and the question then becomes: where are these folks going to go?
It actually gets worse, though: Medium sized businesses, which Tom theorizes plan in 36-month cycles, aren't really thinking about this yet, but beginning next year, it will definitely be on their radar. They, too, will see an opportunity to get out of the group insurance rat-race. And again, the same factors affecting employees of larger companies will come into play here, as well.
Now, I've long been on record as an advocate of privately-owned health insurance. That is, I don't think health insurance should be tied in any way to one's employment (after all, your boss doesn't buy your groceries for you, or pay your mortgage company). The problem is that the mechanism predicated in ObamaCare© is even worse than the current system.
It's the worst of both "be careful what you wish for" and "we have to pass it to read what's in it."
"in which people who have been obliged to conceal their true beliefs by social pressure or sheer force suddenly discover that a lot of other people feel the same way."
This concept holds true not just for individuals, though, but also for businesses (and business owners).
A few days ago, Bob wrote about a recent survey which predicted that "up to 30% of employers may cease to offer health insurance to their employees" come 2014. The impetus for this exodus will be the Exchanges, wherein employers will be able to offload health insurance to that government program.
Today at lunch, my friend Tom remarked that he thinks that number is just the tip of the proverbial iceberg. That is, only about a third of employers today, some 3 years out, claim they'll be dumping their group plans. But Tom thinks that once this initial group sheds their health insurance onus, many, many more will follow suit.
In this case, the Preference Cascade would go like this: large corporations, which tend to strategize in 5 (or more) year increments, see the writing on the wall. They know that they can divest themselves of an expense which is almost impossible to control, with numbers that are nigh unto impossible to predict, and which involve many additional dollars and man-hours in admin costs. For them, 2014 is almost literally around the corner, and they can easily plan to put that expense back onto their employees (and the government).
So a third are already planning for this, and Tom thinks at least one third more will jump onto the bandwagon. And why not? After all, if you're an "early adopter" then it's possible that some of your employees will look for jobs at one of your competitors that still offers group coverage. But there will be (at least) two major hurdles: first, if we're correct (and I think we are), then the Preference Cascade will have already begun its work, and there will be far fewer employers offering coverage. Couple that with continued high unemployment, and the question then becomes: where are these folks going to go?
It actually gets worse, though: Medium sized businesses, which Tom theorizes plan in 36-month cycles, aren't really thinking about this yet, but beginning next year, it will definitely be on their radar. They, too, will see an opportunity to get out of the group insurance rat-race. And again, the same factors affecting employees of larger companies will come into play here, as well.
Now, I've long been on record as an advocate of privately-owned health insurance. That is, I don't think health insurance should be tied in any way to one's employment (after all, your boss doesn't buy your groceries for you, or pay your mortgage company). The problem is that the mechanism predicated in ObamaCare© is even worse than the current system.
It's the worst of both "be careful what you wish for" and "we have to pass it to read what's in it."
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