Social Question

snowberry's avatar

Regarding the new health plan, will larger companies downsize to eliminate the requirement to purchase health coverage for their employees?

Asked by snowberry (27708points) March 27th, 2010

Will this hurt or help the economy? If companies downsize, I can see them outsourcing to fill their needs.

For example, if a larger company has an in-house advertising division, they could downsize and have that service provided by another company. So when all the dust dies down, would it help or hinder the economy?

Would it create or destroy more jobs in the long run? Do you see any other scenarios?

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32 Answers

rpm_pseud0name's avatar

A large company owner was interviewed on TV a few days ago. He has a lot of employees & he pays for their healthcare. It costs him about $300,000 a year to pay for it. With new plan, he could cancel all of their healthcare & just pay the ‘fine’ & save hundreds of thousands of dollars a year by not offering healthcare. But he is a good man, he said he will continue to pay for their healthcare. But not everyone is a ‘good guy’, so I see lots of companies taking the low road on this scenario.

Captain_Fantasy's avatar

Right now, someone with a lot of power is thinking about how he/she can take advantage of the new program. Probably a lot of people. It’ll probably be exploited and we’ll all be outraged but that’s on the offending party. I’d hope that any exploits would be identified and stopped quickly.

galileogirl's avatar

I don’t think PG&E or IBM is going to cut back to LT 50 employees to avoid paying employee insurance. BTW they have been using a different technique for years to avoid paying benefits. They hire “independent contracters” and avoid paying employer’s share of txes too.

malevolentbutticklish's avatar

The “new health plan” will hurt the economy. In the long run destroying capitalism destroys jobs. The Soviet Union discovered this in a negative way while China is discovering it in a positive way by increasing economic freedoms. America is slowly discovering it in a negative way as well.

jaytkay's avatar

Name a company big enough to have an in-house advertising division, which isn’t already providing health coverage.

galileogirl's avatar

@malevolentbutticklish You are living a fantasy if you think we have a free market system (capitalism) in this country. The only think we are going to destroy is the dictatorship by crooked corporatations.

filmfann's avatar

I work for AT&T.
I was told by several people at work that my company is re-examining it’s health care plans, so that most prescription medicine would be handled by Medicare.

UScitizen's avatar

@malevolentbutticklish Excellent summary. I have clients who are already calculating the least expensive way to maneuver through the mess that is coming their (our) way. It looks more and more as if some will cut staffing in order to comply in the most productive response strategy.

malevolentbutticklish's avatar

@galileogirl: Capitalism is a continuum. I do not believe we are as capitalist as we could (and should!) be but I also do not believe we are off of the portion of the continuum known as capitalism.

WestRiverrat's avatar

If I had 45–49 employees, I would be really hesitant to hire any more. The cost of hiring a new employee would probably not be covered by the increased productivity of the company.

jaytkay's avatar

I was told by several people at work that my company is re-examining it’s health care plans, so that most prescription medicine would be handled by Medicare.

Fire everybody under 65?

Cruiser's avatar

This is all about stopping the bleeding that has been a devastating cost and expense to corporations big and small. I mean it is great that everyone will get health care but no one that I can see has taken the time to really examine the how of how this all will ultimately get paid for. Health care is not magically going to get to be cheaper!! Someone is going to have to pay for this and right now that laser is pointing at the very company that pays your salary. How do companies manager these higher costs?? They look to tax breaks as offsets or they charge more for what they do OR not hire and lay off employees. There is no other way around this.

majorrich's avatar

I’m on medicare so I think I am screwed.

thriftymaid's avatar

Not unless they are very close to the minimum number of employees that triggers that requirement. Larger companies may split off units as subsidiaries to accomplish it. However, these companies generally offer attractive benefit packages. I just wouldn’t expect to see a lot of this.

galileogirl's avatar

@majorrich How are you screwed? Time magazine spells it out this week.

For seniors
You will be eligible for preventative services-better to get and stay healthier.
The doughnut hole in your drug coverage goes away

If you have Medicare Advantage-your copay can go up-of course that would probably happen anyway. That screwing comes from the ins cos.
If you make more than $85,000 a year, your Part B premium goes up-is that a problem?

Think about who is trying to control you through fear and stop listening to them!

CaptainHarley's avatar


No one is trying to “control me by fear,” and if they did, I wouldn’t listen.

IF we had a political party which was still concerned about the Constitution, and IF we voted them into office, we would have a free market economy.

malevolentbutticklish's avatar

@galileogirl: You know my feelings on the government takeover bill. Do you really think I go around shaking in my boots all day… or do you instead think that I am patriotic and believe the “health care” bill is bad for our country?

lilikoi's avatar

States like mine already require companies by law (I think of any size, not sure) to provide health insurance for their employees if they work 40 hours or more per week. Some companies – restaurants, notably – like to keep working hours per person under 40 hours a week to skirt the law.

galileogirl's avatar

As stated in my post, I was responding to @majorrich‘s statement that as a Sr s/he felt screwed by the healthcare bill. I then pointed out there was no reason to be. Since s/he felt wrongly that the bill would have been very detrimental to her/him it was obvious s/he had wrong information. The people who are talking about the bill destroying our political system, taking away Medicare etc are the right wing fearmongers. If @CaptainHarley and @malevolentbutticklish bothered to respond to the gist of the post, I might take them seriously. Instead they needed to tell me they weren’t afraid. Whoever said they were?

Rufus_T_Firefly's avatar

@lilikoi – ” States like mine already require companies by law (I think of any size, not sure) to provide health insurance for their employees if they work 40 hours or more per week. Some companies – restaurants, notably – like to keep working hours per person under 40 hours a week to skirt the law.”

That’s precisely the reason that health care reform and some type of all-inclusive or universal healthcare were/are so desperately needed. Most companies and corporations are only there to make a profit for their owners and stock holders and one of the easiest ways for them to do that is to NOT spend money that they don’t have to. By scheduling most of their employees to no more than 32 hours a week, they are absolved of that obligation. Their obligation to their shareholders gets met and yet everyone still, at least, has a job. Sort of. I mean, what kind of person only wants a job that only gets them halfway to where they need to be or doesn’t allow them to purchase basic necessities? No one that I can think of. So, who suffers? I’ll give you three guesses and the first two don’t count.

CaptainHarley's avatar


Did you read the second sentace in my post? Hmmm? : )

jerv's avatar

@malevolentbutticklish I am not 100% for this mess, but it’s better overall than the mess we were in. Maybe if Capitalism worked like it should then I would agree with you more, but as long as people are what they are, we pretty much need somebody to set limits. Or are you in favor of anarchy?
Realistically, you will always have either government interference or blatant wrongdoing, and we’ve had to straddle that line for longer than I can remember. Also bear in mind that some companies actually teach their employees how to fleece the government system to get out of insuring them themselves. People are not nice!
Combine that with the backlash against execs getting millions of dollars for screwing up and basically looting their companies into bankruptcy, and I think you can see why this measure was inevitable.
The sad part is that the rules on the books were enough to prevent such things if they had been enforced, so we really didn’t need as much reform as we got or as people think we need.

Then again, right now I am a temp. That means that the company I work for doesn’t have to pay for my insurance period; they aren’t really the ones I work for. (I am on my wife’s insurance anyways, so it doesn’t affect me.) I see a lot more people like me and a lot fewer permanent employees.

majorrich's avatar

I am on Medicare disability a&b and have already been notified my premium is going up 60% as a a cost savings measure. If that’s helping me, I don’t want any more help.

thriftymaid's avatar

@majorrich We are going to be hearing a lot more of that in a few years.

majorrich's avatar

I am particularly happy that not everybody has to conform to this law. It isn’t good enough for them. And that my medicare supplemental coverage is taxable. Somebody lied about leaving 250,00 and below alone. I am at 34,000 and getting screwed.

majorrich's avatar

Glad I’m not alone. I don’t often participate in politically based discussions. I feel strongly about this one.

CaptainHarley's avatar

In THAT you are DEFINITELY not alone! : )

jaytkay's avatar

I am on Medicare disability a&b and have already been notified my premium is going up 60% as a a cost savings measure.

Notified by whom? That doesn’t sound right.

jerv's avatar

@jaytkay I agree, it doesn’t sound right. Maybe the Tea Party told him? Or maybe it’s an administrative error?

@majorrich If you really are getting dinged at such a low income then I would like to see how that happened. Maybe it’s the same oversight that tried to reclaim my unemployment benefits due to a retroactive denial. Governments screw up from time to time, just like banks, insurance companies, hospitals, and damn near everything else.
I know that they closed that coverage gap that Medicare was renowned for though, and there is less stuff that you have to pay for yourself. I’d like to know how the cost of increased premiums if they really are going up compare to the reduction in your other out-of-pocket expenses too.
I don’t take things at face value, and I tend to go where the preponderance of the evidence leads me. Accordingly, I have to be a bit skeptical of your claim since I haven’t heard it corroborated by other reliable sources.

I’ve been looking for a bullet-point synopsis of the bill (easier to post/share than the original text), and so far the only one I’ve found so far that wasn’t full of in-your-face anti-Socialist rhetoric was this one

It’s funny to note that many people are up in arms about having to pay a $750 if they are uninsured. Lets see…

“Under the new law starting in 2014, you will have to purchase health insurance or risk being fined. If your employer does not offer health insurance as a benefit or if you do not earn enough money to purchase a plan, you may get assistance from the government. The fines for not purchasing insurance will be levied according to a sliding scale based on income. Starting in 2014, the lowest fine would be $95 or 1% of a person’s income (whichever is greater) and then increase to a high of $695 or 2.5% of an individual’s taxable income by 2016. There will be a maximum cap on fines.”

Hmm… the government will help those who can’t afford insurance to buy some, and someone in my income range will pay a maximum fine of ~$520 if you base it on my taxable household income. My personal income is considerably less, so going by individual income would cut it to ~$160. If that is $750 then someone needs to go back to the 2nd grade and re-take their math!

Don’t get me wrong here. The bill isn’t perfect, but I think it’s biggest flaw is that it makes many otherwise intelligent people look like idiots with no math or reading skills. I mean, sure, it’s easier to believe talking heads than to see the truth for yourself, but come on! And if we find hype to be more credible than reality, I think we need better healthcare to pay for the psych meds that we should be taking!

galileogirl's avatar

@majorrich If you had already been informed your premium is going up you must understand that decision must have been made months ago by the insurance company NOT by the government and it has nothing to do with a bill that was passed last week . It is about a general industry trend for years. Increased premiums increase profits which increase stock values. What you need to do is research and find a company willing to make a smaller profit and when you have the next change period, think about it,

The over $250,000 is about a 5.4% tax surcharge on incomes over that ($500,000 for couples) That’s the government. You and I won’t feel that but insurance execs with their 7 figure incomes certainly will.

jerv's avatar

~Corporations are pure, innocent, blameless creatures. It has to be Obama’s fault!

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