Survey: 30% of employers plan to drop health care when ObamaCare kicks in

posted at 2:53 pm on June 8, 2011 by Bruce McQuain
[ Healthcare ]   

This, of course, is “unexpected” (and not believed) by some. In fact, the White House has pushed back saying the findings of the survey of 1,300 employers is at odds with findings from the CBO, Urban Institute and Rand Corporation studies.

In an email response, the official wrote that when Massachusetts initiated its own reform, the number of individuals with employer-sponsored insurance increased.

Indeed, the Rand study released in April noted: “The percentage of employees offered insurance will not change substantially, but a small number of employees in small firms (defined as those with under 100 employees in 2016) will obtain employer-sponsored insurance through the state insurance exchanges.”

In a Jan. 25 study, the Urban Institute said that reports of the demise of employer-sponsored insurance were “premature” and that few would stop offering.

“Our results show the opposite — the [Affordable Care Act] has little effect on overall [employer-sponsored] coverage, and overall employer spending on health care would be slightly lower under the ACA,” according to its own study.

However, one can speculate that as the law becomes better known, employers are having second thoughts about trying to cope with something most of them would just as soon lay off elsewhere. The cost and hassle just aren’t worth it and now that there are alternatives, a good percentage of them are actually interested in pursuing them:

The survey of 1,300 employers says those who are keenly aware of the health-reform measure probably are more likely to consider an alternative to employer-sponsored plans, with 50% to 60% in this group expected to make a change. It also found that for some, it makes more sense to switch.

“At least 30% of employers would gain economically from dropping coverage, even if they completely compensated employees for the change through other benefit offerings or higher salaries,” the study says.

It goes on to add: “Contrary to what employers assume, more than 85% of employees would remain at their jobs even if their employers stopped offering [employer-sponsored insurance], although about 60% would expect increased compensation.

Health care benefits are a net loser for any company. Cost added to the requirement for staff, contracts, problems, etc. makes it a program many employers would love to ditch. But such benefits have become a part of any competitive package through the years – the better the benefits, the more attractive the offer. Now, under ObamaCare, those “Cadillac” plan are going to be taxed (well, unless you have an exemption like most unions). So there’s little incentive to continue with them. Consequently, despite promises to the contrary, employers aren’t going to pay for something that is going to be taxed at a higher rate. So you won’t get to keep your plan.

Employers, in the meantime, are looking for cost savings alternatives and dumping health care cost and the associated hassles has to be very attractive to them. So it comes as no surprise, at least to me, that 30% of those surveyed are considering exactly that. A huge “told you so” that critics pointed to prior to ObamaCare passage that was largely waived away by supporters.

So who you going believe – CBO, Urban Institute and Rand, or human nature?

Yup – me too.

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Bruce McQuain blogs at Questions and Observations (QandO), Blackfive, the Washington Examiner and the Green Room.  Follow him on Twitter: @McQandO

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