President Obama signs the Affordable Care Act (White House photo)
A
new report from consulting firm McKinsey and Co. says that as many as a third of companies in the U.S. will "stop offering health insurance benefits, reduce the level of benefits, or offer benefits only to certain employees" when the Affordable Care Act is fully implemented.
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."
The White House's Deputy Chief of Staff, Nancy-Ann DeParle, hits back against the study at the White House Blog.
The McKinsey Study is an Outlier
Respected independent organizations have examined whether employers will continue to offer coverage. Here’s what they found:
The Rand Corporation: "The percentage of employees offered insurance will not change substantially, but a small number of employees in small firms (defined as those with under 100 employees in 2016) will obtain employer-sponsored insurance through the state insurance exchanges."
The Urban Institute: "Some have argued that the Patient Protection and Affordable Care Act would erode employer-sponsored insurance (ESI) by providing incentives for employers to stop offering coverage. Others have claimed that most businesses would face increased costs as a result of reform. A new study finds that overall ESI coverage under the ACA would not differ significantly from what coverage would be without reform."
Mercer: "In a survey released today by consulting firm Mercer, employers were asked how likely they are to get out of the business of providing health care once state-run insurance exchanges become operational in 2014 and make it easier for individuals to buy coverage. For the great majority, the answer was 'not likely.'"
She also points out that there's little incentive for employers to drop coverage, since offering good benefits can help attracts and keep good employees. The evidence, so far, is on the side of the White House. Massachusetts is a good proving ground, since the ACA is structured after it, and "[f]ive years after that plan took effect, the number of workers with employer sponsored coverage has actually increased."
Republicans will use this report to continue their fight against the Affordable Care Act, but since actual repeal is going nowhere, this argument isn't likely to gain a real foothold until the actual law if fully implemented and we can see the impact on employer-based insurance.