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GOP Report: Employers Would Save Money by Dropping Coverage

The U.S.'s largest companies could save billions of dollars by dropping employee benefits and shifting workers into the federal health reform law's health insurance exchanges, even after paying a penalty for not providing coverage, according to a report released Tuesday by Republicans on the House Ways and Means Committee, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 5/1).

The findings echo concerns from a similar report released last week by Republicans on the House Energy and Commerce Committee, which found that certain companies on President Obama's Council on Jobs and Competitiveness expect the overhaul to increase their health care costs and could provide incentive for them to drop coverage for their employees (California Healthline, 4/27).

Report Details

The new report -- titled "Broken Promise: Why ObamaCare Will Force Americans To Lose the Health Care Coverage They Have and Like" -- is based on a survey of 71 Fortune 100 companies (House/McCarthy, National Journal, 5/1).

The overhaul requires businesses with more than 50 employees to provide health coverage or pay a $2,000 fine for each worker who purchases coverage on his or her own. However, the report found that the fines would be less costly than providing health benefits.

By comparing the companies' anticipated health care costs with the cost of paying the penalty, the report found that the companies would save $28.6 billion in 2014 if they dropped health coverage for their workers ("Healthwatch," The Hill, 5/1). Over a decade, the companies would save $422.4 billion, the report found.

Ways and Means Committee Chair Dave Camp (R-Mich.) said the report and previous studies suggest "there is a distinct financial incentive for employers to terminate health care coverage under" the overhaul (National Journal, 5/1).

Democrats Call Report 'Cynical'

Democrats on the Ways and Means Committee criticized the report, noting that it did not ask whether the companies intended to continue providing coverage, CQ HealthBeat reports (CQ HealthBeat, 5/1). They added that the report is "cynical" in its predictions, and pointed out that most large companies have voluntarily provided coverage for years.

Josh Drobnyk, a spokesperson for Rep. Sander Levin (D-Mich.), said, "According to the logic of this so-called report, businesses could have 'saved' even more money if they dropped employee coverage years ago, which is perfectly legal and carries no penalty" (Winfield Cunningham, Washington Times, 5/1).

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
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