Study: Big employers unlikely to drop insurance under health law

News outlets report on the employer health insurance market.

Kaiser Health News: "One of the most fundamental ideas in the new health law is that employers should offer health insurance to their workers, or else they would have to pay a penalty, beginning in 2014. The fear has been that many businesses would opt for 'or else,' leaving their workers searching for coverage. But a new survey of more than 2,800 employers, conducted by the benefits consulting firm Mercer, found no big reason to worry. Medium and large companies project that, for the most part, they will hold onto their health plans. Just six percent of survey respondents with 500 or more employees said they are likely to drop their plans. The picture is different for small businesses (10-499 employees). Twenty percent -- one-fifth -- told Mercer they are 'likely' to stop offering health plans once people have the option of buying insurance from state-run exchanges, virtual marketplaces" (Parashar, 11/9).

The Kansas City Star: The survey "cautioned that the 20 percent estimate may not become reality, if the experience in Massachusetts is a guide. Massachusetts has a three-year experience with a state-run insurance exchange, much like the system that is targeted for the nation under the health insurance reform law. In that state, few employers actually have dropped their plans, the Mercer report noted" (Stafford, 11/9).

The Philadelphia Inquirer: "More worrisome is how a proposed 40 percent excise tax on the most generous, high-cost insurance plans might affect employers. The Mercer survey found that 39 percent of employers with 50 or more employees could trigger the excise tax when it first takes effect in 2018, and that might be costly enough to prompt 'a significant change in health-benefit strategy'" (Armstrong, 11/10).

The New York Times: "With health care costs climbing even higher during this enrollment season, more employers are adopting a tiered system to pass on the bulk of those costs to their employees by assigning bigger contributions to workers in top salary brackets and offering some relief to workers who make less money. … More and more companies in the last year or so have begun signaling their recognition of the added burden shouldered by workers in low- and middle-income jobs by varying the premiums they pay based on salary. Consultants say the trend is likely to continue, as employers devise various ways of spreading increased health care costs among their staff and balancing that side of the ledger against fewer raises and other compensation" (Abelson, 11/9). 

The New York Times, in a second story: Meanwhile, as "Obama administration officials put into place some of the new rules that go into effect under the federal health care law, they are issuing more waivers to try to prevent some insurers and employers from dropping coverage and also promising to modify other rules because many of the existing policies would not meet new standards. Last month, federal officials granted dozens of one-year waivers that were aimed at sparing certain employers. ... These limited-benefit plans ... fail to comply with new rules phasing out limits on how much policies will provide in medical care each year" (Abelson, 11/9).

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This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.