9% of U.S. Employers To Drop Coverage Within 3 Years, New Report Finds
Nearly one in 10 U.S. employers plans to drop health coverage for their workers within the next three years, and more indicate that they could do so after that, according to a Deloitte study expected to be released Tuesday, the Wall Street Journal reports.
For the study, Deloitte between February and April this year surveyed corporate and human resources executives from 560 companies that offer health coverage.
While about 81% of the respondents said their companies plan to continue providing benefits, 9% said their companies are expected to drop coverage in the next one to three years. Ten percent of respondents said they were unsure of their future plans.
Further, the study found that one-third of respondents would drop coverage if:
- The federal health reform law requires them to provide more generous benefits than they currently offer;
- A scheduled tax on high-cost plans takes effect in 2018; or
- The cost of penalties for not providing insurance is less expensive than providing coverage.
According to the Journal, the minimum coverage requirements for employers under the health reform law have prompted some businesses to reconsider their voluntary health benefits provisions. Critics of the Affordable Care Act have argued that employers might be forced to cut the benefits if they become too expensive, noting that they also would have to pay a penalty if they fail to meet the minimum requirements.
More Details From Deloitte Study
The size of companies appeared to play a role in whether they would continue to provide coverage, the Journal reports. Fewer than 2% of employers with more than 1,000 workers said they were considering dropping coverage, while 13% of companies with 50 to 100 employees said they expect to stop offering health insurance in the next three years. Just 16% of employers said they would drop coverage if a competitor did so.
Meanwhile, about 75% of respondents said their companies plan to or already have implemented changes to their coverage plans, such as increasing employees' contributions, setting fixed contributions or offering incentives for health behaviors.
Deloitte Study One of Several in Past Year To Examine Employer-Sponsored Coverage
Deloitte's findings differ from those of a similar survey conducted by rival consulting firm McKinsey & Company, the Journal reports (Radnofsky, Wall Street Journal, 7/24).
In a report released in June 2011, McKinsey said that nearly 30% of 1,300 employers it surveyed would "definitely" or "probably" stop providing insurance plans after most of the major ACA provisions are implemented in 2014. The Congressional Budget Office previously estimated that only about 7% of employees would lose coverage by 2019 (California Healthline, 6/21/11).email subscription.