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Employers Consider Dropping Health Coverage Under Obamacare

Posted By Lachlan Markay On August 25, 2011 @ 5:30 pm In Featured,Obamacare,Scribe | Comments Disabled

Reports from employers continue to belie President Obama’s repeated insistence that, under his new health care law, Americans would not lose their employer-provided health insurance coverage. A new survey shows that more than one in ten midsized and large employers are at least “somewhat likely” to drop their health coverage once Obamacare’s “exchanges” go into effect in 2014.

“Let me be exactly clear about what health care reform means to you,” President Obama said [1] during his Obamacare push. “First of all, if you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan.  Nobody is talking about taking that away from you.”

The president assured “stability and security” in the health care system in the video above (via Guy Benson [2]), but that seems to be exactly what Obamacare is not creating. In addition to companies that said they would drop health care coverage, 20 percent told Towers Watson that they weren’t sure what they will do come 2014. Seven out of 10 employers surveyed expects to lose grandfathered status by 2012. Uncertainty, in other words, is rampant among those surveyed.

The Associated Press reported Wednesday [3] on a survey by benefits consulting company Towers Watson:

Employer-sponsored health insurance has long been the backbone of the nation’s health insurance system. But the studies suggest that some employers, especially retailers or those offering low wages, feel they will be better off paying fines and taxes than continuing to provide benefits that eat up a growing portion of their budget every year.

The exchanges, which were devised under the health care overhaul, may offer an alternative for their workers. These exchanges aim to provide a marketplace for people to buy insurance that can be subsidized by the government based on income levels.

A large majority of employers in both studies said they expect to continue offering benefits once the exchanges start. But former insurance executive Bob Laszewski said he was surprised that as many as 8 or 9 percent of companies already expect to drop coverage a couple of years before the exchanges start.

Such a move comes with potential payroll-tax headaches and could subject firms to fines. It also would give their employees a steep compensation cut if companies don’t raise pay in exchange for ending coverage.

In all, the study found that 9 percent of employers surveyed were “somewhat likely” to drop their health care plans. Two percent said they were “very likely.” That’s actually a slight increase over the findings of the other study to which the AP article referred. Conducted by Mercer, another benefits consulting company, that survey showed that eight percent of employers were “likely” or “very likely” to drop their coverage under the new Obamacare regime.


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URL to article: http://blog.heritage.org/2011/08/25/employers-consider-dropping-health-coverage-under-obamacare/

URLs in this post:

[1] President Obama said: http://blogs.abcnews.com/politicalpunch/2009/07/president-obama-continues-questionable-you-can-keep-your-health-care-promise.html

[2] Guy Benson: http://townhall.com/tipsheet/guybenson/2011/02/02/if_you_like_your_plan,_you_can_keep_your_plan

[3] The Associated Press reported Wednesday: http://www.google.com/hostednews/ap/article/ALeqM5iXwmrQoR3cUCX6ZmxDj4Ey-dRXqA?docId=09b76e78319c43b3845656e60a9635c4

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