The high cost of Obamacare to large companies

Erick Erickson:

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The letter is stunning. According to Delta, in 2014 Obamacare will cost the company at least $38 million in direct costs and that is only the beginning. With added medical inflation, Delta claims “the cost of providing health care to our employees will increase by nearly $100,000,000 next year.” A $100 million increase thanks in large part to Obamacare and ancillary cost increases derived therefrom. Yes, I have the letter. From the letter:

The ACA requires large employers to pay an annual fee of $63 per covered participant in 2014. For Delta’s roughly 160,000 enrolled active and retired employees and their family members, this represents more than $10 million added to the cost of providing health care next year. As we discussed, this fee, which is meant to help stabilize the state exchanges as they get started, provides absolutely zero direct benefit to our participants. It is, essentially, a direct subsidy from us and our employees to those who participate in the exchanges.

Delta also notes that because adults can be left on their parents’ insurance until they are 18, Delta is already incurring an additional $14 million per year. The company notes that under Obamacare, “We are required to charge the same for these children as we do for any other children covered by our plan. However, our experience shows that, on average, these children are consuming considerably more health care than other children we cover.”

Because of the individual mandate, Delta estimates more of its employees coming onto insurance who have otherwise declined it. That will increase their costs $14 million too. The company notes that it does not plan to reduce hours for workers to under thirty hours, but is aware that other employers will.

More troubling, Delta notes it designed a specific insurance plan for its pilots. But because of “cadillac tax” rules, Delta is going to have to scrap that plan because, though it meets the needs of Delta’s pilots, it runs afoul of government regulations relating to the extravagance of plans.
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Those who have been claiming that if you work for a large company that provides healthcare you should not see any changes are very likely wrong.  Delta can't possibly absorb this kind of hit.  It will have to restructure its healthcare benefit and it will also mean fewer raises for employees in order to cover the burden imposed by Obamacare.