Leave it to those who have been born in the free market system to come up with a solution that is unique, innovative, and at the same time, a stinging rebuke of the bureaucrats who feel, that despite all evidence to the contrary, they are more qualified than say very small pebbles to make any decisions on any matter of economics, business, industry, or family budgeting. Two things happened this week. I reached a personal grim milestone, in that my personal out of pocket expenditure for health insurance has reached a 150% increase since the passage of the, “affordable care,” act, more commonly referred to as Obamacare. The other, I saw President Obama on my television today proclaiming that health costs are, “coming down.” When you stop laughing, please read on.

There is a vast difference between the cost of something and its price. While the two will always be involved in a causal relationship, it is still important to understand the difference. that is why I am frustrated with the fact that most Americans have a tendency to conflate the two issues to the point where even our vaunted media reports on them as if they were one and the same.

The cost of something relates to what the producer of a particular good or service paid in terms of their own resources in order to get that good or service to the market place. The price is what they charge the public to purchase that good or service. Ultimately, the public could not care less as to whether or not the producer makes or loses money in the transaction. Those making the purchase care only about the price, and nothing about the cost.

So, when the President goes out into the Fruited Plains and declares that, “we’re already starting to see health care costs come down,” he’s not exactly being honest in his discussion with us. There are a few states in the country where the price for health insurance was already astronomically high due to massive state government intrusions into the market places of those states. Massachusetts, Oregon, Vermont, and New York are examples of this. What the President was reporting on, was that in those states, the massive government subsidy meant to aid constituents dealing with the ravages of Obamacare, were enough to offset and in two cases exceed the resulting price increases. The costs, irrespective of the prices being sought, have shown massive increases in the other 46 states. The only reason the costs didn’t skyrocket in those four states is that the costs were already sky high, due to similar programs having already been enacted in those four states.

That’s a huge problem with Obamacare that even the only moron to win a Nobel Prize for economics, Paul Krugman, should probably be able to see. Obamacare, for all of its 3000 pages of complexity, coupled with the 3,000,000 so far and counting pages of regulation, does nothing to even explore the drivers of cost, and in fact exacerbates them. So while costs continue to skyrocket, and the promise is made to subsidize prices by burdening tax payers, anyone with a third grade level of math skill should be able to see where this will end up. Eventually, despite the heroic efforts to subsidize prices that will inevitably be undertaken, the completely ignored costs of doing business will eventually become too great to continue ignoring.

The story will not stop there however, as it never does. Corporations, who wish to remain open for business will find a way to remove the effects of those costs from their own income statements, and pass those effects off to others, meaning their customers or employees. Enter Sears, Walgreen’s, Darden Restaurants, and many more to come. A company called Aon PLC. has initiated a privately run healthcare exchange in which these companies have agreed to enter. In that exchange, the employees of those companies, along with 600,000 others so far, are free to purchase their own health insurance policies, privately. The subsidy will be in the form of a cash bonus paid by the companies who employ them.

Walgreen Co. (WAG), the biggest U.S. drugstore chain, will move its workers into a private health insurance exchange to buy company-subsidized coverage, the latest sign of how the debate over Obamacare is accelerating a historic shift in corporate health-care coverage.

Walgreen’s decision affects about 160,000 current employees and follows similar action this year by Sears Holdings Corp. (SHLD) and Darden Restaurants Inc. (DRI) As an alternative to administering a traditional health plan, all three will send their employees to an exchange run byAon Plc. (AON) Fourteen more companies will join in 2014 when 600,000 people will participate, Aon said.

The insurance options offered by the private exchange are similar to those in the Affordable Care Act’s public exchanges, though workers will get their subsidies from their companies instead of the government, said Ken Sperling of Aon. While the private effort isn’t directly linked to Obamacare, the debate over the law has spurred a new look at cost-cutting by businesses, municipalities and consumers.

Here’s how it will work. You may not realize this, but when you pay your premium pre tax out of your check every pay period, What you pay is usually about 10% to 20% of the total cost to your employer for that policy. The remainder of the price is subsidized for you. 80% to 90% of the price is eaten by your employer as an employment cost, and is attributed to the total payroll. What Walgreen’s et al is doing here, is genius. In lieu of purchasing a health care plan on behalf of their employees, they are going to, in effect, give everyone a raise which will be equivalent to that 80% to 90% of the price for health insurance that they once picked up. They’ll instead direct the employees to those privately run exchanges, with full disclosure to the IRS of course, and let the details become somebody else’s problem. They’ll get to save the money that they used to spend on administration and compliance issues related to offering those plans, satisfy the legal requirements, and gain control of the once out of control costs associated with health insurance.

What the employees will get out of all of this of course is screwed. They may be better off in the short run, and may not be. In the long run however, as the price charged for those health plans increase, as everything in our world does over time, they have no guarantee that the subsidy will increase along with them. In fact, there is nothing in the law passed by the clowns in Washington that says what percentage of a health plan an employer must subsidize, only that one be offered.

Further, those employee bonuses paid to subsidize the plans will be taxed at prevailing regular income rates. Add to that the employee’s new financial responsibility for compliance costs, administration, cost increases in the product they’ll be forced by the government to purchase, and I can see a future where the people who inflicted this upon us will be chased from town via pitch forks and torches, adorned with the fashionable attire known as tar and feathers.

I don’t know if anyone saw this coming or not, but I will give one more tee hee here. Walgreen’s you see was one of the cheer leaders for this crap sandwich we’ve all been asked to eat, so to see them taking this step should be surprising. It would be if there already wasn’t a long list of advocates finding ways to rid themselves of the consequences of what they’d done to the rest of us.

Cross Posted from Musings of a Mad Conservative.