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“ObamaCare” will Cost West U Employees $75,000 in 2014

October 1, 2013 By:InstantNewsWestu Staff

Local News

The Affordable Care Act, popularly referred to as “ObamaCare,” went into effect today, but City of West U employees will not see a difference in their health insurance until January of 2014, when they will have to absorb $75,000 of additional costs related to implementing the federal program.

 The city has already absorbed about $50,000 in annual inflationary costs from their healthcare provider, Blue Cross Blue Shield. The additional $75,000 comes from administrative overhead costs relating to the Affordable Care Act.

 “Unfunded mandates are never attractive to cities, and this is another example of an unfunded mandate which, unfortunately, we had to pass along to the employees,” said City Manager Michael Ross. “It’s not something we want to do, but it is something that is out of our control. We get them from the state periodically, and this is one of those federal unfunded mandates that employers don’t have a choice about implementing.”

 Based on the city’s current estimates, which could change, employee only coverage will increase by $18.12 per month. Employee plus child coverage will increase by $33.53 per month, employee plus spouse coverage will increase by $39.90 per month and employee plus family coverage will increase by $58.01 per month.

 West U pools their employees with the cities of Webster, Dickinson and Friendswood to take advantage of lower rates for larger groups. West U currently has 125 full-time positions. All full-time employees are required at a minimum to enroll in the employee only program, but the city pays a large share of all health insurance premiums.

 Currently, and until the end of the year, employee only coverage costs a total of $453.05 per month, and the city covers 100 percent of that cost if the employee takes part in the city’s wellness program. If the employee does not take part in the wellness program, they pay $90 per month.

 Employees plus children currently pay $200 of $838.25, employee plus spouse costs the employee $250 out of $997.47 and employee plus family costs the employee $275 out of $1,450.25.

 Along with the added administrative fees for 2014, the city will pay an additional penalty tax in 2018 if their quality of their coverage is not dropped from what is called “gold” coverage down to “bronze” coverage.

 West U Human Resources Director Wendy Standorf says the city currently provides what is being called a “Cadillac plan” and is considered a Gold Plus Standard.

 Under the current plan insurance pays about 82 percent of costs. Under a Bronze plan, that percentage drops to about 60 percent.

 “If we have the same plan in 2018 we will have to pay a penalty because we are providing a better plan than the bronze level plan,” said Ross.

17 Responses to ““ObamaCare” will Cost West U Employees $75,000 in 2014”

  1. miltonwatchdog Says:

    Brokelyn, your talking points are straight out of the Obama playbook. Not likely that you or any of your family has signed up for ObamaCare in the last couple of days. But, it you do, and you are chosen to participate in the best of plans, we hope you enjoy your visit to a government-run health clinic and examined by a nurse because your doctor no longer can afford to practice. We are beginning to find out what’s in it, Nancy.

    As we see the value of a nation crumble, thank a Democrat. And, Joseph, get your head out of your hummus and talk to a WWII veteran about your government and how he feels about people like you.

    • Brokelyn Says:

      Miltonwatchdog — I haven’t read anybody’s playbook so I don’t know what the talking points are. Whatever I said was purely a figment of my own thought process. For better or for worse.

      Are “government-run health clinics” actually mandated by the ACA? Or is that hyperbole?

      I don’t know where to begin with your previous statement. There’s nothing factual or addressable there. It appears that you are having an emotional reaction to these changes and that is leading you to extrapolate consequence to the extremes. I don’t view things in such black/white terms. The ACA is imperfect, I state that with certainty and can back it up with facts from the bill. I also can cite analysts and practitioners who have a deep understanding of the ACA (and the industry) who point out the many benefits. As the thread above between Unashamed Capitalist and myself illustrates, there is a very real divide between the perceived value of adding friction to an economy that is built around the principles of a free market. In economic theory, my arguments are entirely wrong. In reality, there are intangible factors that are difficult to measure within a classic economic study of whether government action is beneficial (and what is the definition of beneficial) or not.

  2. Econ 101 Says:

    The ACA does not make any “investments.” I work with health plan design for a living, and the increased costs are almost entirely attributable to ACA mandated coverage without any patient cost. Not surprising that “free” care increases the cost of care. If car insurance had to cover oil and tire changes, the insurance cost would increase more than the cost of those items because you add insurance administrative costs to the price of the good and change behavior to over-consume those goods. The ACA does the same thing with health care. The CBO projected cost savings are due to projected rationing (through medical review boards) that will never occur, just like scheduled reductions in Medicare reimbursements are delayed every year (“doc fix”).

    • Brokelyn Says:

      Econ 101 — Interesting insights. You are absolutely right that the added administrative costs of the program (any government program for that matter) creates friction and reduces net outcomes. However, removing this friction from our system would drive supply to the most attractive source of demand — those who can pay the most. At a certain level, there will no longer be supply available for the least attractive cohort — those who cannot pay (much) for services. We can follow the principles of Economics 101 and allow those non-productive resources (poor people) to suffer and eventually die, but our medical system does inject its own form of friction by servicing anyone with critical need in the ER regardless of the person’s ability to pay. Are we not currently providing healthcare services with no patient charge to over 30 million people who obtain services at ERs but who cannot pay for it?

      Interesting analogy to car maintenance. I recently bought a car–first time in many years–and I was surprised that the dealership (actually most dealerships we shopped at) offered “free” maintenance services including oil changes for the first year. They are certainly not a low-cost provider of this service and they have certainly added the cost of the service to my purchase cost. Why do they do it? There is more than one reason, but the biggest reason is because it reduces the risk of larger problems that are covered under warranty from cropping up due to owner negligence of the small stuff. May I turn your point around and suggest that giving people in need regular access to healthcare services (including preventative care, which is considered an unheard of luxury to those without coverage today) will reduce the frequency and severity of diseases and conditions that are much, much more costly to treat? Treating an eye infection now versus saving the eye with surgery when it gets to that point will reduce the Total cost of healthcare in the long-run.

      This is what I was referring to as “investment.” It’s incredibly difficult to draw a line between the investment and the benefit. It’s probably impossible in any time-frame shorter than those measured by generations. This same issue arises when we debate the value of space exploration, solar/alt energy, and other grand pursuits.

      One last thought. The most sobering thing facing our planet over the next few decades is overpopulation. In less than 40 years Nigeria (a little bigger than Texas) will have more people than the US. In less than 90 years, the world will have 11 billion people. Our generation must do what we can to think about how the planet and society is going to provide for all of these people and any source of limited supply is going to one day become something over which we fight wars. Access to affordable healthcare will not be available to a growing sub-set of society at the current pace of industry inflation. There is NO time for complacency or for fear. Our children are likely to be alive when the globe tips 11 billion people and there will be absolutely no time to fix things at that point. Pull off the bandage, take one for the team, use whatever metaphor you prefer — this is our time to make a difference.

  3. West U Resident Says:

    Why are there any inflationary costs this year?? I thought the ACA was going to make the costs of healthcare go down? Right?

    Is the $75k charge directly associated with the additional overhead and implementation of ACA a one time fee or is this added overhead permanent? Oh well. Shucks. I wondered if this new law wouldn’t actually backfire and cost most previously insured through private companies to experience increases to their premiums. Or maybe I am just brainwashed.

    • Brokelyn Says:

      West U Resident — I hope cost increases will slow down, perhaps going down is wishful thinking.

      It requires investment to make major change. You can save money by mowing your own lawn, but you have to first buy the lawn mower. Our lawmakers are not business people so I don’t listen to any of their projection of what the ACA will do. The CBO, which are financial-minded people, estimated that the ACA would save the country $109 billion over 10 years (that means that costs would be $109 billion less than it would be otherwise, not that we would reduce total spending by $109 billion from today) while delivering healthcare services/insurance to 30 million more people (10% of our country). That said, I’ve never met a person who can make an accurate 10-year forecast (and I’m in the business of forecasting) so I can guarantee you that the $109 billion figure is wrong.

      So, the answer is that nobody knows EXACTLY what will happen. I look at the basic premise and see that more people will get coverage (and this will make their consumption more rational, versus emergency-based) and that theoretically this can be accomplished while pursuing a goal of reducing the trajectory of spending growth. It’s worth pursuing.

  4. Unashamed Capitalist Says:

    Brokelyn – I never want to rely on the government to fix a broken system. Our society is littered with unintended consequences from government intervention. Interestingly, company sponsored healthcare was a direct response to federally mandated wage caps put in place during WWII. Wanting to attract talent, but unable to offer higher wages, companies started offering health insurance as an incentive. Additionally, as employees received company sponsored health care, they were insulated from the increasing cost of health care and became less concerned about unnecessary/expensive treatements and procedures. Government needs to get out of the way.

    • Brokelyn Says:

      Unashamed — Excellent point about the genesis of broad corporate healthcare coverage. The employer-centric healthcare model in the US is unusual and not desirable. A system independent of the employer that provides an opportunity for individuals to obtain portable coverage would make much, much more sense. Private insurance thus far has not been the answer, unfortunately. The mostly unregulated industry is not compelled to provide affordable coverage to the most needy. I think this is the crux of the problem that the ACA is attempting to address. That we as a society need to address.

      Government has stayed out of the way, and for that we have a terrible mismatch between services provided and services required. The millions of people who regularly use the ER as their source of medical care are using the healthcare system’s resources inefficiently. The free market is not adapting to this. Or perhaps a better way to state it is that the free market has adapted by raising the cost of care by a rate much, much faster than any other segment of our economy. That “tax” is being felt by the entire system — from higher prices as companies seek to cover rising costs to lower wages as rising premiums make up a larger percentage of a worker’s total compensation.

      You are correct in saying that government influence created a system that doesn’t work well (enough). However, that ship has sailed and the wage caps no longer exist. What was put in place remains in place even though employers are no longer bound by the original conditions that created the monster. Perhaps the ACA is a way to roll back some of the damage caused by Truman’s decision by creating a sizable risk pool that will run parallel to the existing system. Time will tell if that risk pool ends up being profitable for insurers, but if it is, then capitalism will take over and momentum will shift away from employer-centric coverage.

      • Unashamed Capitalist Says:

        Government has stayed out of the way? Medicare and Medicaid quickly come to mind. These are two more shining examples of why government needs to get out of the way.

        • Brokelyn Says:

          Unashamed–Without Medicare and Medicaid the mismatch between services provided and required would be even more out of balance. Unless we allow medical practitioners to summarily reject patients in the same way that any free market enterprise can choose to do so based on the ability ot pay for services rendered, then government or a regulatory body must be involved. The free market cannot (and will not) provide social benefits outside of the mandate to maximize value creation. That’s what it means to be a capitalist.

          I am truly interested in your solutions. I believe in the capitalist system, but not a pure form (the pure form of pretty much anything is not optimal in my opinion). I suspect that you feel differently?

          • Unashamed Capitalist Says:

            Government intervention or regulatory oversight certainly doesn’t improve the mismatch between services required and services provided. The Invisible Hand is always a much better option, but can’t claim perfect efficiency. It’s interesting to me that the costs of purely voluntary procedures, not covered by health insurance, remain competitive and affordable: plastic surgery, lasik surgery, etc. Additionally, technology for these procedures have had significant improvements over the years
            I don’t claim to have any of the solutions, but I think health insurance should be dropped down to the catastrophic level and everything else paid out of pocket by the individual. Prices could be negotiated, procedures could be shopped around, and innovation can occur. We don’t have auto insurance for oil changes, new tires, or transmission work, and we shouldn’t have health insurance for annual physicals, blood work, and other routine doctor visits. Like having auto insurance for accidents, we should only have health insurance for major surgeries and long-term hospital care.
            Thanks for keeping this civil and helping me sharpen my arguments.

  5. Tangley Resident Says:

    How was the Hannity show last night, Miltonwatchdog?

  6. miltonwatchdog Says:

    Let’s try to understand these key words: “additional costs related to implementing the federal program.”, and “administrative overhead costs related to the Affordable Care Act.”
    Premiums for a City employee with a wife and three kids will increase $157.71 per month, or just under $2,000 per year! This is on top of current premiums.

    The cost to “implement” and the administrative overhead costs, plus the burden placed on our city employees and their families is, as stated, ObamaCare is a disaster and a train wreck.

    • Brokelyn Says:

      $75,000 divided by 125 employees is $600 per person.

      Did you catch the part about $50,000 in annual inflationary cost increases by the insurance carrier? That has been a recurring, annual event for a long, long time.

      The ACA isn’t a disaster, rising costsof healthcare and insurance is a disaster. Doing nothing as we have done (and our parents before us) is the true disaster. Complain all you want but what do you get if the ACA is reversed? Do you really want status quo? Do you think that healthcare costs will magically decrease? We will all stop getting fatter and acquiring new diseases? We will all voluntarily agree to stop asking for expensive treatments that are covered by insurance, just because we can?

      ANY effort to structurally cut costs (not just trim the fat) typically requires up front investment. That’s what we’re living through now. It violates the rules of inertia and upsets those have much to lose, but if we fix something that is broken then there will be a long-term payback. Over 100 people died building the Hoover Dam and over 20,000 people died in the building of the Panama Canal. Had we lost our nerve at every wrong turn would those exist today and what would our country look like without the economic benefits and competitiveness both delivered?

      So we are all suffering from uncertainty. Why do we attack or support the Act as if we really know how it is going to turn out? I have no idea, but I refuse to summarily reject it on the grounds of “pain.” This is the first time our country has put any kind of effort into fixing what is broken. Like any major effort it will not work well at times. I’d rather roll up my sleeves and be a part of the solution than a road block to progress.

      • Joseph Says:

        Of course…they complain about the cost of ACA and take the ever increasing costs of healthcare and the increasing costs and profits of the insurance companies seating down.
        What a brainwash have the likes of Fox, Ted Cruz, Perry and the rest of the mafiosi done to those that don’t bother to inform themselves beyond what they see or hear on the tube.
        Nothing better for demagogs that an uninformed public. A sad, sad state of affairs.

  7. tom Says:

    125 employees….really?

    • Brokelyn Says:

      tom — are you saying that 125 is too many or too few? I’m guessing too many, right?
      West U: 125 employees, 14,000 citizens = 112 citizens/employee.

      I did a bit of homework and found the following data. All the following high net worth cities (in the same general category as West U) are listed in a Houston Business Journal article that covers recent Census data. I found the data for the number of city employees and number of residents from other sites, including the official city sites (and I rounded off for simplicity).
      Kenilworth, IL: 25 employees, 2,300 residents = 92 citizens/employee
      Southlake, TX: 259 employees, 26,000 residents = 100 citizens/employee

      I have to get back to my day job — I don’t think we’re out of line in our government employment figures compared to comparable cities. If you want fewer services, then I’m sure we could cut costs.

      Anyone who has worked with our City folks know that these aren’t flashy people living high on the hog. I appreciate what they do for us.

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