NCPA - National Center for Policy Analysis

Health Care Overhaul May Push Employee Benefits Shift

August 26, 2011

Nearly one of every 10 midsized or big employers expects to stop offering health coverage to workers after insurance exchanges begin operating in 2014 as part of President Barack Obama's health care overhaul, according to a survey by benefits consultant firm Towers Watson, reports the Associated Press.

  • Towers Watson also found in its July survey that another one in five companies are unsure about what they will do after 2014.
  • Another big benefits consultant, Mercer, found in a June survey of large and smaller employers that 8 percent are either "likely" or "very likely" to end health benefits after the exchanges start.
  • The surveys, which involved more than 1,200 companies, suggest that some businesses feel they will be better off dropping health insurance coverage once the exchanges start, even though they could face fines and tax headaches.

The percentage of companies that are already saying they expect to do this surprised some experts, and if they follow through, it could start a trend that chips away at employer-sponsored health coverage, a long-standing pillar of the nation's health system.

Benefits consultants say most companies, especially large employers, will continue to offer coverage because they need to attract and keep workers.  But that could change if a competitor drops coverage first.

Source: Tom Murphy, "Survey: Overhaul May Push Employee Benefits Shift," Associated Press, August 24, 2011.  "Employers Committed to Offering Health Care Benefits Today; Concerned About Viability of Insurance Exchanges," Towers Watson, August 24, 2011.  "U.S. Employer Health Plan Enrollment Up 2% under PPACA's Dependent Eligibility Rule," Mercer, August 2011.

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