By Charles J. Farro
That’s what a 2011 McKinsey & Company survey predicts. Of more than 1,300 employers surveyed, 30 percent responded that they will "definitely" or "probably" stop offering employer-sponsored health insurance after 2014.
That is significantly higher than the Congressional Budget Office (CBO) estimation that 7 percent of empoyees currently covered by employer-sponsored plans would be forced to switch to subsidized exchange policies that year. The discrepancy between the CBO’s numbers and the McKinsey findings throws yet another wrench into the health care reform controversy.
Not surprisingly, the White House and many Democrats are questioning the validity of the study and claiming that the numbers are grossly overstated. While McKinsey admits that their survey found "a bigger effect than expected," they are standing by the results. In their defense, spokeswoman Yolande Daeninck said in a recent interview , "The article presents the results of a survey of more than 1,000 companies on U.S. health care reform in February 2011. The article reflects the opinions of the respondents at that point in time. Obviously the survey is only one indicator of the employers’ view of likely future actions. Many uncertainties remain, and the actions and timing of actions of employers will ultimatley depend on numerous variables."
Of course, one of those variables will be an employer’s ability to attract and retain employees without a company-sponsored health plan. While dropping coverage and paying the penalty may make financial sense on the surface, employers will have to carefully weigh the impact of that decision on other areas of their business. Interestingly, McKinsey’s consumer research found that more than 85% of employees – and almost 90% of higher income employees – would stay with an employer that dropped health coverage.
While a lot can happen between now and 2014, it is clear that health care reform will continue to meet with resistance and may not ultimately achieve the goals of its supporters. Our team at BRG will continue to stay on top of new developments and bring you all of the information and guidance you need to make the tough decisions along the way.
Chuck Farro is Chairman, CEO and co-founder of BRG. He manages BRG’s operations and directs marketing services. You can contact Chuck by phone at 216-393-1800 or by email at
cfarro@benefitsrg.com.© 2011 Benefits Resource Group
