Democratic reforms were supposed to drive down costs and expand access, but a new study forecasts employers rolling back benefits
The more a company knows about coming changes to the nation's health care laws, the more likely it is to consider radically restructuring the way it provides insurance to employees, according to a study by the consulting firm McKinsey and Co.
The study, which is being circulated among Republicans, predicts that as many as 30 percent of companies will stop offering health insurance benefits, reduce the level of benefits, or offer benefits only to certain employees. If this prediction holds, the number of Americans who could see changes to their health insurance would be far more than the 9 million to 10 million estimated by the Congressional Budget Office.
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That means that the cost of subsidizing plans for those people -- about $19 billion a year, according to the CBO -- could more than triple. And, if the report's predictions are borne out, many Americans would lose their health insurance.
The study contradicts at least three others predicting that reform will have a negligible effect on employer-sponsored insurance. A Rand study finds the number of employees who would lose insurance to be "small," and the Urban Institute believes that the percentage "would not differ significantly."
"History has shown that reform motivates more businesses to offer insurance," said an administration health care expert who read the study at National Journal's request. "Health reform in Massachusetts uses a similar structure, with an exchange, a personal responsibility requirement, and an employer responsibility requirement. And the number of individuals with employer-sponsored insurance in Massachusetts has increased."
In first selling the plan to Congress, President Obama said that "no one" who liked their current plan would be dumped into a subsidized insurance market by their employers. But his language changed once it became clear that some employers would find it cheaper in the new system to not offer health benefits at all.
"When I say if you have your plan and you like it ... or you have a doctor and you like your doctor, that you don't have to change plans, what I'm saying is the government is not going to make you change plans under health reform," Obama said in June 2009.
With a few exceptions, beginning in 2014, companies with more than 50 employees would have to provide insurance to every worker or pay the government a fine.
If a company estimates that it would pay $3,500 a year per person for the plan, the economic incentive alone might lead them to drop coverage -- and give the employee a raise at the same time, McKinsey says.
McKinsey surveyed 1,200 companies and conducted other "proprietary research" to determine how companies, when presented with incentives in the new health care regime, would act in the future. It also surveyed thousands of employees across regions and industries.