California Healthline Daily Edition

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Insurance Market To Remain ‘Stable’ Under Reform, Report Finds

The health insurance market will remain "fairly stable" under the federal health reform law, as large employers likely will continue offering plans to workers, according to a recent analysis by Avalere Health, CQ HealthBeat reports.

For the analysis, Avalere examined various findings by other research groups, including RAND, the Urban Institute, the Lewin Group and the Congressional Budget Office (Norman, CQ HealthBeat, 6/20). Avalere researchers also surveyed employer benefits consultants to better understand how employers make decisions about company health plans (Sargent, "The Plum Line," Washington Post, 6/20).

Despite finding that most large employers will continue to offer coverage, Avalere said "longer term erosion" is possible 10 to 20 years after the overhaul goes into effect if statewide health exchanges are preferable over employer-based health plans.

Avalere also estimated that large and small companies with many low-wage workers likely will choose to pay penalties under the reform law and have workers enroll in the exchanges. In addition, study authors wrote that "the offers of early retiree coverage are likely to decline dramatically" and be replaced by defined benefit contributions, which would force early retirees to join the exchanges as well.

The findings contrast a recent survey by McKinsey that found about 30% of businesses plan to drop employer-sponsored coverage because of the reform law (CQ HealthBeat, 6/20). That study was met with widespread criticism from Democrats and some health experts. McKinsey on Monday revealed the methodology of the study and said it "was not intended as a predictive economic analysis" of the effect of the reform law (California Healthline, 6/21).

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