Last week, Tennessee Gov. Phil Bredesen, who had to shrink a
huge and hugely expensive TennCare Medicaid expansion, laid out the employers’
case for dropping employees’ health insurance on the op-ed page of the Wall
Street Journal. MIT professor and paid ObamaCare advisor Jonathan Gruber
claimed in the New Republic that the governor couldn’t
do math.
Gruber bases his argument on the pay of state employees and
the cost of insurance. He claims that 40 percent of Tennessee state employees
earn more than four times as much as the federal poverty level. He then
estimates that the plans Bredesen’s math shows to cost the state $10,000 per
employee "would cost about $6650 for an individual and $17,400 for a
family in 2014."
Let’s take the employee salary question first. According to
state data obtained through OpenTennessee.org,
just 6,000 employees would earn four times the poverty level for a family of
two — $53,280 per year including additional state pay to make them whole.
Governor 1, Paid Presidential Adviser 0.
Employees now pay roughly $2,000 of their insurance costs.
Bredesen would add another $2,500 in salary to cover their new costs. Throw in
a federal subsidy of up to 76 percent of the cost of a policy and a family of
four earning $50,000 actually saves money in the exchange compared to getting
insurance through the state. That $17,400 policy gets a subsidy of $13,224. The
employee can burn through the $2,500 in new salary and end up paying just
$1,676 — a savings of $324.
That assumes the employee wants to keep exactly the
insurance coverage from before. Healthier people would likely choose either to
purchase less expensive coverage, which would leave them with smaller subsidies
but more money in their pockets, or to go without coverage and pay the monetary
penalty knowing they could get insurance when they need it.
For those in worse health or with higher incomes, the
choices are roughly the same since insurance rates are capped and penalties reach
at most $695 per person or 2.5 percent of income, making the penalty even more
appealing for those few state employees who do not qualify for a subsidy.
Governor
2, Paid Presidential Adviser 0.
Employers in the private sector have also done Bredesen’s
math and come to the same conclusion: it’s
cheaper to drop insurance and pay employees than it is to continue insuring
them.
Governor 3, Paid Presidential Adviser 0.
