Will Your Employer Drop Coverage Under Obamacare?
The promise from President Obama was straightforward enough: "If you like your health care plan, you can keep your health care plan. Period. No one will take it away," he said.
That was four years ago, during the build-up to the passage of the Affordable Care Act. Today, just months before several major provisions of the law take full-effect, many Americans still aren't sure whether to believe him.
And for good reason. Wildly conflicting predictions are being reported almost daily.
Last month, the consulting firm Towers Watson released a survey in which 98 percent of employers reported they will keep "active medical plans for 2014 and 2015." But as the conservative Heritage Foundation points out, the same study found that 92 percent of employers said they would likely change their health insurance options by 2018, the year the law's "Cadillac" tax on high-cost plans takes effect, with 47 percent saying they "anticipated significant or transformative change."
Meanwhile, a new report from PricewaterhouseCoopers found that in Massachusetts -- where the model for the federal plan was enacted seven years ago -- employer-sponsored coverage rose rather than fell. "The number of people covered by insurance through the workplace increased by about 1 percentage point, running counter to the rest of the nation, which saw employer-based insurance decline by 5.7 percentage points," the report said.
But will that hold true on a national scale? Maybe not. Many companies are heavily considering forcing retirees and part-time workers onto the exchanges after the ACA kicks in, according to a survey by the National Business Group on Health.
And just last month, UPS announced that it will stop offering coverage to the spouses of 15,000 workers because they will be able to find coverage elsewhere. The company wrote in a memo to employees that rising medical costs "combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost."
Whichever way it goes, the stakes are high, as analysis published Monday in the journal Health Affairs points out. Tom Buchmueller, a professor of risk management and insurance at the University of Michigan, explains why in four simple bullet points:
"The [health reform] provisions affecting employers directly ... all increase the likelihood that firms will offer coverage."
But if that doesn't happen, "a reduction in employer coverage might increase federal outlays if it led to more workers' receiving premium tax credits in the exchanges or enrolling in Medicaid."
"If the employers that dropped coverage had relatively less healthy workers, that change would worsen the exchange risk pool and drive up average premiums as a result."
"Finally, the Affordable Care Act was presented to the American public as a reform that would not seriously disrupt existing employer-sponsored coverage. To the approximately 170 million Americans who have such coverage and are for the most part satisfied with it, a large-scale dropping of coverage by employers would be an unwelcome surprise."
So what's Buchmueller's prediction? When it comes to large firms, very little will change, he said. For smaller firms, all bets are off. To find out why, the NewsHour spoke with Buchmueller late last week.
Interview can be found at link. It's interesting.