Health Care Reports Clash over Employer Coverage
Business + Economy

Health Care Reports Clash over Employer Coverage


The debate continues over the impact of health care reform on employer-sponsored health insurance.

Two studies out today from the Robert Wood Johnson Foundation and the Urban Institute conclude that coverage will actually grow in response to reform, a report sharply counter to a recent survey suggesting major employers are planning to drop insurance coverage in response to the new health care reform law.

According to the new studies, the law, which goes into effect in 2014, won’t prompt large employers to yank their workers’ insurance coverage, while many small businesses will extendi health coverage to reap cost savings.  A review by the consulting firm Avalere released this week also found that large employers will “take a wait-and-see approach,” and won’t drop coverage in the short run since the cost of eliminating coverage could trump the cost of offering it.

The new data contrast sharply with a survey from consulting firm McKinsey & Co. that drew fire from the Obama administration, suggesting that about one-third of the firm’s clients would stop offering workers health insurance coverage and instead send employees to the state-based health insurance exchanges set up under the law. Republicans in Congress who favor repealing the reform legislation have been trumpeting the McKinsey findings.

“ObamaCare is forcing job creators to stop offering health coverage,” House Speaker John Boehner, R-Ohio, said in a statement following the McKinsey report.  “As businesses begin planning for the onslaught of ObamaCare taxes, mandates, regulations, and penalties coming down the pike, many are left with two untenable choices: stop offering health care for their employees, or eliminate full-time jobs and keep wages low.”

Democrats continued to fire off criticism at the McKinsey report, even after the consulting firm said its survey was simply meant “to capture the attitudes of employers.” The firm said its survey shouldn’t be compared to economic-modeling-based data collected by the Urban Institute, Robert Wood Johnson Foundation, and the Congressional Budget Office, which earlier this year concluded that the law would have a relatively small impact on employer-sponsored coverage. 

“This report is filled with cherry-picked facts and slanted questions,” Senate Finance Committee Chairman Max Baucus, D-Mont, said in a statement.   “It did not provide employers with enough information for them to make honest choices and fair evaluations. Rather than correct the major deficiencies in their report, McKinsey has chosen to again stand by their faulty analysis and misguided conclusions.”

One health economist says using the different predictions to cast blame will be rendered moot since employer-sponsored health insurance won’t last in the long term.  “It’s ironic to attack the law on this basis because, across the political spectrum, people in the political and economics community have said what we really need to do is get away from employer-sponsored insurance—that we need to slowly start to sever that connection,” said Austin Frakt, a health economist at Boston University. 

One of the reports released today finds that 7.3 million fewer people have employer-sponsored health insurance than ten years ago.

Related Links:
McKinsey Unveils Details of Study on Employer-Based Health Coverage (California Healthline)
U.S. Healthcare Law Seen as Aiding Employer Coverage (Reuters)
Controversial McKinsey Health Care Study Creates Major Dissent at Firm (Talking Points Memo)