Nearly half of employers may stop employee’s health benefits

By Dr. Ananya Mandal, MDJun 8 2011

A latest speculation suggests that nearly a third of employers are likely to stop offering health insurance to employees in 2014 when major federal healthcare-reform provisions kick in. This comes from a new report by McKinsey Quarterly.

The report from the Congressional Budget Office says that only 7% of employees would be forced into subsidized-exchange policies. However their survey of more than 1,300 employers suggests otherwise. That research found that 30% said they would “definitely or probably” drop the insurance policies. That number rises to more than 50% among employers with a high awareness of healthcare reform.

The McKinsey report says that American workers will likely have some sort of health coverage through their employers, if not through new health insurance exchanges. Authors write, “Most employers, however, will find value-creating options between the extremes of completely dropping employee health coverage and making no changes to the current offering.” It adds, “The shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike.”

However, more than 85% of employees would stay at their jobs even if their company stopped offering health insurance, according to the report, although the majority of them would expect a boost in pay to compensate. And most employers would meet that expectation, offering employees a higher salary, more vacation time, or other benefits, the study found.