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Who Losses? Who Wins?

Posted Sep 11 2013 3:38pm
Stanley Feld M.D.,FACP,MACE

IBM wins because it wants out of providing healthcare insurance for retirees.

The government wins because it gains more control over the healthcare system.

It is as if big business is playing right into the Obama administration’s hands.

 The healthcare insurance industry wins because it gets more administrative services fees from the government without risk.

The brokers for the healthcare insurance industry win because they will take more commissions from individual consumers than they would from an institutional company.

IBM retirees lose.

 Most retirees will go on Medicare Part B or Medicare Advantage. President Obama is planning to eliminate Medicare Advantage.

Medicare Part B is means tested so the more income that is generated from any source by a retiree the higher the premium paid to the government for Medicare Part B.

The Medicare premiums are paid with pre tax dollars from retirees Social Security payment. The supplemental insurance (Medicare Part F) covering deductibles and co-pays are not tax deductible.

Medicare is increasing the deductible and co-pay requirement in 2014. Therefore the non tax-deductible supplemental premiums will increase in price.

The premiums of both Medicare and Medicare supplements for services and drugs can amount to more that $16,000 a year for a husband and wife calculated in terms of after tax dollars..

Large companies provided the healthcare coverage as a benefit to retirees tax-free.

IBM has been trying to get out of providing healthcare coverage for employees since 1999. Obamacare has provided an excuse for IBM to discontinue its coverage for retirees.

General Electric (GE) made the same announcement a while ago. Time Warner made its announcement right after IBM.

Companies who have changed their healthcare coverage for retirees include DuPont, Caterpillar, Sears and Darden Restaurants.

Many more companies are about to joint in.

It is obvious this was coming as a result of Obamacare.

The move disregards the social contract made with employees when employees were first hired.

International Business Machines  Corp. (IBM) is going to discontinue its company-sponsored health plan for about 110,000 retired employees.

 IBM plans to provide retirees a fixed payment. The payment will be used for retirees to buy their own health care coverage through a “private” health insurance exchange.

 Once retirees are eligible for Medicare at age 65, IBM would not be responsible for managing these retirees’ healthcare benefits.

IBM said, “the growing cost of care makes its current plan unsustainable without big premium increases.”

IBM told retirees, “that its current retiree coverage will end for Medicare-eligible retirees after Dec. 31, 2013.”

IBM is shifting the responsibility to the retirees for buying their own coverage through “Private Health insurance Exchanges.”

It sounds like a costly rip off to the retiree. IBM is providing a subsidy for now. Then IBM will discontinue the subsidy.

One Private Health Insurance Exchange executive said.

"Companies were turning off plans," he said. "We've given them a proven way to subsidize. At some point every single retiree will join a Medicare exchange."

Some union-affiliated groups and retirees weren't convinced. Lee Conrad, national coordinator for the IBM Global Union Alliance, said

The worker group sees this as just another take-away of retiree and employee benefits."

Donald Parry, an engineer who retired in 1992 after nearly 32 years at IBM, said he is concerned he may have to pay more. "The worst thing right now is not knowing what's going on,"

At the moment the cost of the government providing Medicare coverage is unsustainable according to the CBO. This is despite Medicare premiums being means tested and the escalation of Medicare premiums.

Despite the increase in premiums Medicare will run out of funds by 2024.

The choices are higher means tested Medicare premiums (redistribution of wealth), decreased access to care or rationing of care. I believe it will be all of the above. The burden of this change will fall on the taxpaying consumers’ shoulders.

As big businesses drop coverage for retirees, the Medicare roles will increase and the government will run out of fund prior to 2024.

Excessive costs, commissions, and bureaucratic inefficiencies part of any government program.

The Obamacare bureaucracies seem to have no concern for the inefficiencies and increase in deficit spending.

It is as if they are saying, “Bring it on.” All the government wants is control of the healthcare system.

The result will not be affordable care. It will be unaffordable care that is rationed with limited access to care.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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