Several big companies say that continuing to offer employee health care under the new reform laws just doesn’t make financial sense. And they’re seriously considering scrapping their plans altogether.
Bad news for lawmakers that just assumed companies would keep providing health coverage even after the reform law’s mandates kicked in: New evidence shows that four major employers — Verizon, AT&T, John Deere and Caterpillar — have crunched the numbers so see whether they should “play or pay.”
Their conclusion? It’ll be cheaper — way cheaper — to pay the penalties to the government and drop their employee health insurance plan.
Of course nobody thought a company would pull the rug out from its employees by actually dropping coverage. But then again — nobody thought dropping coverage to pay a penalty would save a company 75%, and nearly $1.8 billion, off its healthcare bill. That’s what AT&T calculated it would save.
Caterpillar came to the same conclusion. It said it could shave 70% off its bill by doing the same thing.
These findings come from internal documents recently reviewed by Congress.
The companies didn’t intend for this information to become public. It did so as a result of demands by Rep. Henry Waxman (D-CA) that the companies turn over all of their internal documents to Congress relating to healthcare reform compliance.
A real possibility
With so much savings involved, it no longer seems unrealistic that employers would drop their health plans and essentially give employees a “raise” to buy coverage on state insurance exchanges.
None of the four companies commented in their reports as to whether they would actually drop their coverage. But it’s pretty clear they’re taking a good long look at that possibility.
Would your company consider dropping employee health coverage once the reform law’s 2014 “play or pay” mandate kicks in? Share your opinions in the Comments Box below.