How Obamacare Will Devastate Non-Profits

While certain Americans cheer the establishment of Obamacare, many fear the ultimate economic impact of the legislation.  Certainly there is a way to solve the health care crisis in this country, and many say that Obamacare is better than nothing.  I suspect, however, that as the years roll along, this will not prove to be the case at all. 

Setting aside what will happen to actual healthcare itself, the economic impacts are already working through the system, and none of it is encouraging.  This should come as no surprise, given that we had to pass the bill to find out what was in it.

I want to emphasize that what I’m reporting is thus far anecdotal.  It remains to be seen if these anecdotes are representative.  My guess is that they will be.

A friend wrote me from a Midwestern city, where he works at a non-profit.  This is one of those non-profits that actually does good work, providing pro-bono advocacy work for families in extreme distress.  People and children are at risk, and the government simply can’t provide the resources to provide a safe environment fast enough, so this terrific organization steps in.

My friend is the CFO, and he actually read the bill after it was passed in order to find out what was in it.  When he did, his hair stood on end.  He checked, double-checked, and triple-checked his calculations.  He ran it past a colleague, whose hair also stood on end.  Together, they ran it past a third colleague – a top expert in the area of Obamacare (such as they are).  They all stood around in amazement at the results.

My friend then made his report to the Board of Directors.

The cost of providing insurance to employees of the non-profit, or paying a fine for not providing the insurance, would be so expensive that the organization would have to fire 53% of its employees AND increase donations by 112%.  Otherwise, the organization would be bankrupt in 28 months.

The Board sat is stunned silence.  Someone whispered in a choked voice, “I don’t think that’s right.  Obamacare will lower costs”.  There was fearful, whispered assent, like the voices on the Island in “Lost”. 

“I wish,” my friend said, “but that’s just not the case”.

What ensued was denial by the Board of Directors – a Board consisting of high-income, well-to-do White Liberals. 

So we see yet another consequence of passing a law that nobody has actually read.  Let’s remember that the vast majority of charitable and pro-bono organizations in this country are non-profits.  Billions of dollars are donated every year to these organizations.   The people who make these donations are often wealthy, and part of their motivation is likely the tax deduction they receive in exchange for this donation. 

The result of Obamacare will therefore be to shift money that otherwise would have gone to those in need to the government (in the form of a fine).  In other instances, that money will instead provide health insurance for the non-profits’ employees, which was not the intent of the donor.  In the worst case scenario, employees will just be fired, end up on unemployment, but the non-profit may have to scale back its assistance to those in need since it will have less staff (while the fired employees will enjoy government assistance provided in the form of increased income taxation on these same wealthy people).

What we’ll see as more of these stories leak out is denial. My favorite comment comes from a Facebook friend, who responded to the story thusly:

That is bull***t. If you force more people into buying private insurance (Obamacare), then wouldn’t the price of insurance go down since more people are purchasing it, and you build in exchanges to increase competition? I’m sorry, but I think companies and insurance companies that blame this on Obamacare are taking their premium payers for a wild ride to gain profits, and the people who believe that it’s because of Obamacare while those companies will see record profits are the real dumba**es. Whoever the person was that didn’t question the above during that conversation both misunderstands Obamacare, and is the real dumba**. I’m tired of the dumba** being the people who actually understand how the program works.

Denial. 

If anything, Obamacare was designed to put health insurers out of business in the long run.

Stay tuned.  It’ll get worse.


How Obamacare Will Devastate Non-Profits

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