The elimination of employer based health care coverage begins, 3M leads the way. Will you be next? Sorry, but if you like the coverage you have, you probably will not be able to keep it

Buried back in the “Marketplace” section of the October 4 issue of the Wall Street Journal, page B7 is an interesting article that all working Americans should note.  The headline reads, “3M to Make Changes in Health Plans for Retirees, Workers” 

Let me phrase that article differently, if you like the insurance you have you cannot keep it. 

3M has opened the floodgates on the future elimination of health insurance coverage for millions of workers in direct response to the health care reform legislation. You can be sure that more employers will follow this lead. 

In essence, 3M is doing away with its health plans for early retirees by 2015 and for retirees eligible for Medicare by 2013.  The company plans are being replaced by a “health reimbursement arrangement”, or to put it another way, you get a fund from the company to spend on health insurance you buy on your own.  In the case of early retirees, that means the new government sponsored exchanges, in the case of retirees eligible for Medicare it means go find your own Medicare supplement plan.  When you hear the term defined contribution plan, start to worry. 

Employers who make this change not only are responding to the enactment of PPACA and its many uncertainties, but also taking advantage of it because it presents an opportunity for them to reduce or eliminate their retiree medical liability, a huge accounting expense on the books of any employer offering retiree medical benefits. With the passage of PPACA, CFOs see the possibility to reduce the expense for retiree coverage and bump up their earnings per share a few cents in the process.  Do not underestimate the influence of this incentive. 

Americans should ask; if employers will cut retiree coverage to cope with health care reform, will they do the same thing for active employees?  You bet your sweet butt they will. 

This incentive for employers to drop coverage may have been part of the grand design of health care reform, what better way to gradually move more and more Americans into a government-run program? All that needs to be done is to get the employer out-of-the-way. What better way to do that than increase the employers costs, increase administrative complexity, inundate them with regulations and provide as safety valve to make it easier for the employer to get out of the business of health benefits. 

By gosh, there is joy in Mudville today! 

Policymakers may not be as smart as they think.  Along with the elimination of employer coverage comes millions more Americans eligible for the government a subsidy within the new health insurance exchanges.  Golly, gee does that mean more government expense?  

In addition, for those who say that employers are only in the business of health benefits because of a turn of events during WWII and should leave workers to choose their own coverage, consider this.  There are 70 million Americans covered for health care through self-insured employer health benefits plans.  These Americans were never subject to the “abuses” of health insurance, they have good coverage and they have someone in their corner when things go wrong and they need help.  They have someone looking out for their costs and in many cases their health care.  They receive accurate and complete communication about their benefits. They can call an employer representative to resolve problems, they can negotiate and trade wages for health benefits and so much more that goes with employer based coverage.  This all goes away when employers drop their sponsorship of health benefits. Workers cut lose to join an exchange plan truly will be on their own. 

You may be for or against health care reform as it exists today, but you cannot argue with two facts.  Millions of Americans will see their current health benefits changed dramatically or eliminated. Moreover, health care costs regardless of the source of health care coverage are not being controlled and will continue to rise as rates far above general inflation.

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That does it, I don’t want to see one of those damn subversive sticky pads in this department again