Report Says One-Third of Employers Could Drop Health Coverage in 2014
Of the 1,300 surveyed employers, 30% said they will "definitely" or "probably" stop providing employer-sponsored insurance plans after most of the major federal health reform law provisions are implemented in 2014.
Furthermore, 45% to 50% said they will "definitely" or "probably" seek an alternative to employer-sponsored insurance plans, including asking workers to contribute more to coverage or offering health plans only to certain employees.
According to the report, published in McKinsey Quarterly, the findings indicate that "the shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and low-income workers alike."
The McKinsey report's projections are higher than recent Congressional Budget Office estimates, which suggest that only about 7% of employees who have employer-sponsored insurance will be required to obtain alternative coverage. More than 85% of employees said they would stay in their positions if health insurance was no longer provided, the report found. However, a majority of employees said they would expect a compensation increase, which most employers said they would provide (Adamy, Wall Street Journal, 6/8).
The federal health reform law appeared to be an important driver of employers' decisions to abandon health coverage. According to the study, the more employers understand about the reform law, the more likely they are to cut sponsored plans (Walker, MedPage Today, 6/7).
White House Response
The Obama administration says it is continuing to encourage employers to retain health coverage, the Journal reports. According to White House spokesperson Nick Papas, the McKinsey report is an outlier amid research indicating that employers will continue to offer coverage as health reform is implemented (Wall Street Journal, 6/8).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.