By Kathryn Mayer July 24, 2012
About one in 10 employers in the United States say they’ll drop health coverage for employees in the next few years as the major provisions of the Patient Protection and Affordable Care Act take effect, and more indicated they may do so over time, a survey by consulting company Deloitte finds.
Opponents of health reform have argued that employers dropping health coverage is an unintended consequence of the law that will negatively affect employees who want to stick with the coverage they know and like.
Employer-sponsored health insurance covers more than 160 million Americans.
There’ve been conflicting reports over how many employers will drop coverage for employees, with Deloitte’s report predicting a lesser impact than some. Last year, consulting firm McKinsey & Co. drew fire from when they stated 30 percent of respondents will “definitely” or “probably” stop offering employer-sponsored health insurance after 2014.
According to the Deloitte survey, 9 percent of companies said they expect to stop offering insurance in the next one to three years. Around 81 percent said they plan to continue providing benefits, and 10 percent weren’t sure. Most employers said they offer health benefits to attract and retain employees and sustain job satisfaction.
But more employers said they might drop coverage if state health insurance exchanges and other elements of the law are implemented and effective. Using Deloitte’s Health Reform Impact Model, the Center for Health Solutions examined the effects of an employer exit from benefits, as well as three other possible scenarios resulting from the likely impact of the PPACA on health insurance coverage. Under the different scenarios, it was estimated that potentially between 23 million and 65 million individuals may join a health insurance exchange by 2020.
But for the most part, the survey found, employers aren’t big fans of health reform. The majority, at 60 percent, say it’s a “step in the wrong direction.” Thirty percent say it’s a good start. Most employers also say their company isn’t well prepared to implement the 2014 provisions of the law. They also say they don’t fully understand it.
Overall, employers believe the U.S. health care system underperforms. Thirty-five percent of employers surveyed grade system performance as an “A” or a “B,” while 64 percent give it a “C,” “D,” or “F.” Employers hold favorable views about the system’s clinical capabilities and medical innovation and unfavorable views center on its wastefulness and high costs.
Employers say high health costs are driven most by hospital costs, followed by inefficiencies, unhealthy lifestyles, prescription drug costs, insurance company costs, and government regulation.
The study, conducted between February and April, surveyed corporate and human-resources executives from 560 companies currently offering benefits.