CAPITOL PERSPECTIVES
ers as they have for their retirees' drug coverage.
My first column for Life Science Leader, published last
spring, detailed the compelling math for an employer of
lower- or middle-income workers to dump their employees into Obamacare. The modest $2,000 penalty for large
employers failing to provide coverage pales in comparison to the substantial subsidies available in Obamacare
to lower- and middle-income workers. For example, an
employer offering typical coverage to a family of four with
an income of $48,000 would save $7,400, even after it covers the increased income and payroll taxes that result from
moving nontaxable benefits into taxable wages.
So the real risk is not whether too few sign up for
Obamacare, but too many. The Congressional Budget
Office predicts that only 8 million individuals will lose their
employer-sponsored coverage. But if just 10 percent of
employees with employer-sponsored coverage are dumped
into the exchange, that number will double to 16 million.
Employer dumping of coverage will result in painful
coverage disruptions with more narrow provider networks
and tighter drug formularies in Obamacare. Just as importantly, it will require greater government subsidies that
will, in turn, result in greater scrutiny over pricing and
increased pressure to restrain costs.
John McManus is president and founder of The McManus Group, a consulting firm specializing in strategic policy and political counsel and advocacy for healthcare clients with issues
before Congress and the administration. Prior to founding his firm, McManus served Chairman Bill Thomas as the staff director of the Ways and Means Health Subcommittee, where he
led the policy development, negotiations, and drafting of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Before working for Chairman Thomas, McManus
worked for Eli Lilly & Company as a senior associate and for the Maryland House of Delegates as a research analyst. He earned his Master of Public Policy from Duke University and
Bachelor of Arts from Washington and Lee University. He can be reached at jmcmanus@mcmanusgrp.com.
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LifeScienceLeader.com
January 2014