Will employers make good on threats to drop employee health plans once healthcare reform regs fully kick in?
A McKinsey & Co. study says 30% of all employers will “definitely” or “probably” stop offering their workers health insurance once the bulk of the healthcare reform law’s mandates take effect in 2014.
That figure jumps to 50% among employers with a “high awareness” of the reform law’s requirements, the study found.
The study was conducted earlier this year and surveyed 1,300 employers nationwide. The results were published in the June issue of McKinsey Quarterly, the consulting company’s business journal.
- 60% of employers said they’ll pursue some alternatives to a traditional employer-sponsored insurance plan — like weighing a switch to a defined-contribution model, in addition to dropping coverage.
- 30% of employers would gain economically from dropping coverage — even if they completely compensated employees for the change through higher salaries and adding other benefits.
- 85% of employees would remain at their jobs even if their employer stopped offering health insurance.
- 60% of employees would expect their compensation to increase if their employer dropped coverage.
Paints a harsh picture of reform
After the results of the study were published, the Obama administration was quick to question the validity of the research.
White House officials immediately went to work citing previous studies by organizations like Rand Corp, the Urban Institute and the Congressional Budget Office, which say the percentage of employers that’ll drop coverage will be much lower than the 30% figure McKinsey’s study concluded.
The administration also said that in Massachusetts, where a similar version of health reform was enacted, the number of workers with employer-sponsored coverage actually increased.
There are reports Democrats pushed McKinsey to hand over the study data, and the company declined, claiming the material is proprietary.