Friday, March 26, 2010

Unintended Consequences of Government Intrusion Into Health Care

Unintended consequence here is , who would have "thunk", that savings might not materialize. Increase in taxes may force companies to drop prescription coverage for retirees on their plans. Where do they go? Directly to Medicare. No savings, just federal control. Utilities will cover these increased costs by rate increases, on everyone. There is no "free lunch".

With more than 3,500 companies now getting the tax break as an incentive to keep providing coverage, others are almost certain to announce similar cost increases in the weeks ahead as they sort out the impact of the change.

Figuring out what it will mean for retirees will take longer, but analysts said as many as 2 million could lose the prescription drug coverage provided by their former employers, leaving them to enroll in Medicare's program.

"You're increasing the incentive for companies to say 'We don't want to be in the health care business any more,'" said James Gelfand, senior manager of health policy for the U.S. Chamber of Commerce, which fought the overhaul.

American industrial companies that are struggling to compete globally against companies with much lower labor costs are particularly likely to eventually drop retiree coverage, said Gene Imhoff, an accounting professor at the University of Michigan.

Read AP article here.

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