Health Care Survey: Employers May Cut Plans After 2014

Health Care Survey: Employers May CutPlans After 2014 some Employers Plan to NixCompany-Provided Health CareplansEmployees can kiss goodbyeemployer-provided health coverage,at least as it exists today. That's themessage of a survey of 1,300employers just released by McKinsey& Co. Overall, 30 percent of employers said that after 2014, whenmost of the provisions of the Obama administration's healthreforms kick in, they would definitely or probably stop offeringcompany-sponsored health coverage.The findings dramatically differ from those of previous surveys andanalysis. The Congressional Budget Office, for example, hasestimated that only about 7 percent of employees currentlycovered by corporate health plans will have to find alternatives.McKinsey's findings, if correct, contradict the White House's viewof how health reform will play out. They would constitute, in theeyes of the administration, a highly inconvenient truth. A WhiteHouse spokesman yesterday addressed them in an interview withABC News's Jake Tapper, noting that McKinsey's survey was "prettystarkly at odds" not just with the CBO's analysis but with those ofthe RAND Corporation and "with history."By "history" he said he meant the experience of Massachusetts,after that state passed its own version of health care reform. Saidthe spokesman: "History has shown that reforms motivate morebusinesses to offer insurance." The number of employees withemployer-sponsored health coverage in Massachusetts, he said,has increased, not decreased. Addressing the McKinsey findings hesaid, "We simply just disagree with those conclusions."How could McKinsey's findings differ so dramatically fromprevailing wisdom? Easily, say its authors.Unlike other surveys, they say McKinsey's first "educatedrespondents" about the implications of health care reform (fortheir companies and employees) before it asked them about theirpost 2014 strategies. "The propensity of employers to make bigchanges [to company-provided health coverage] increases withawareness, largely because shifting away will be economicallyrational, not only for many of them but also for their lower-incomeemployees, given the law's incentives."Further, the McKinsey survey, unlike some others, presentedemployers with a range of alternatives to their continuing to offerpresently existing coverage--not just keeping it as-is or dropping itoutright. Not surprisingly, respondents showed "a level of interesthigher than that generated by surveys asking only about plans tokeep or drop" insurance.Other findings of the survey include:-Though 30 percent of employers say they will stop offering healthcoverage after 2014, the percentage rises to 50 percent amongemployers with "a high awareness of reform."-At least 30 percent of employers would gain economically bydropping coverage, even if, to retain employees, they had to offersome other form of compensation (higher salaries, say, morevacation or greater flex-time).-Contrary to what some employers assume, most employees(85%) say they would stay at their present jobs if their employerstopped offering health coverage. A majority, however, wouldexpect to get some some kind of increased compensation inexchange.-Up to half of all employers (45-50 percent) say they will definitelyor probably pursue alternatives to company-supplied healthcoverage after 2014. "Those alternatives," write McKinsey'sauthors, "include dropping coverage, offering it through a defined-contribution model, or in effect offering it only to certainemployees"--for example, those whose skills they need to retain.The government has a special web page that explains the healthcare law.