Report: O-Care to save large corporations hundreds of billions

The Affordable Care Act could save some of America’s largest corporations hundreds of billions of dollars over the next decade, according to a market analyst group.

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According to a report by S&P Capital IQ released Thursday, S&P 500 companies will likely move their employees from employer-provided health insurance plans to the healthcare exchanges under the Affordable Care Act, saving employers nearly $700 billion through the year 2025. If current healthcare inflation stays constant, those savings could be greater than $800 billion, researchers found.

Corporations are expected to start out by dropping low-wage and part-time workers from their employer insurance plans since they are able to reap the benefits of government tax subsidies under ObamaCare, leading them to pick up new plans under the healthcare law. Eventually, the burden of healthcare coverage will shift from employers to employees.

“Neither lawmakers nor the White House originally anticipated the idea that the ACA could provide corporations with an enormous subsidy to earnings,” say authors of the report. “However, once a few notable companies start to depart from their traditional approach to health care benefits, it's likely that a substantial number of firms could quickly follow suit.”

As some Republicans have softened their tone on repealing the new healthcare law before the November elections, authors of the report say the political battle may shift to try fix it by making it more market-oriented, increasing coverage options and updating federal regulations.

The report compares ObamaCare to the Employee Retirement Security Act of 1974, which led to the creation of Individual Retirement Accounts. The result was employees took ownership of their pension funds, leading employers to stop using their corporate pension structures and instead become contributors to the employees' pension plans.

ObamaCare is also expected to be beneficial to employees as they gain ownership of health insurance plans that aren't based on their place of employment. The report says as more people join, cost of coverage should come down while access to benefits improve. However, it warns premium costs for some people who do not qualify for government subsidies will likely rise.

“At the moment, any drastic changes to employer-provided health care benefits would likely be frowned upon by employees and the voting public at large,” warns the report. “Neither lawmakers nor the White House originally anticipated the idea that the ACA could provide corporations with an enormous subsidy to earnings.”

However, change is not expected overnight. The report says corporations will likely start of by shifting entry-level college graduates, low-wage workers and part-time workers to health insurance plans through the ACA since they are most likely to benefit from the new healthcare model first. Eventually, higher paid workers will likely be given stipends from their employers to pay for ObamaCare. But as they will not be able to keep up with healthcare inflation, the stipends will become part of their wage.