One in three employers may drop health benefits, report says


The predictions about healthcare keep coming. The latest suggests that nearly a third of employers are likely to stop offering health insurance to employees in 2014 when major federal healthcare-reform provisions kick in. This comes from a new report by McKinsey Quarterly.

The Congressional Budget Office estimated that only 7% of employees would be forced into subsidized-exchange policies, the report said, but the survey of more than 1,300 employers suggests otherwise. That research found that 30% said they would “definitely or probably” drop the insurance policies.

As Reuters notes in its article about the latest prediction: That number rises to more than 50% among employers with a high awareness of healthcare reform.


Still, American workers will likely have some sort of health coverage through their employers, if not through new health insurance exchanges, the McKinsey report says (registration to view the report is free):

“Most employers, however, will find value-creating options between the extremes of completely dropping employee health coverage and making no changes to the current offering.”

On the medical front, the blog KevinMD recently offered predictions related to healthcare reform as well. It begins: “While I’m not sure I’m ready to concede that Obamacare has already damaged health care in America, I will agree the law is certainly is changing health care, aligning health care corporate interests with political interests, with doctors feeling the squeeze between the two.”

And on the anniversary of the passage of the healthcare overhaul, the Kaiser Family Foundation asked a variety of “players and experts” what the new healthcare landscape would, or should, look like. Here are their responses.

As for that McKinsey report, it noted that companies will have to decide how to balance the need to attract talented workers with the penalties and tax advantages of different levels of coverage. Companies with more than 50 workers, for example, will have to offer health benefits to every full-timer or pay a penalty. And they won’t be able to offer better health benefits to highly paid executives than to hourly employees.

But about those talented workers. Most employees -- 85% -- wouldn’t quit their job if their employer dropped health insurance, though 60% would expect cash compensation, the report said.

Still, it’s hard to predict precisely how the healthcare changes will play out. The report concludes:

“Employers should recognize that as the ESI [employer-sponsored insurance] market changes after 2014, the system will react dynamically. If many companies drop health insurance coverage, the government could increase the employer penalty or raise taxes. Employers will need to be aware of actions by participants at any point along the health care value chain and prepare to adapt quickly.”

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