Few agree on outlook for employer coverage

August 1, 2011

Up to 30% of employers might drop employee coverage after 2014.

NATIONAL REPORTS-A recent study released by McKinsey & Company suggesting that up to 30% of employers might drop employee coverage after 2014 has sparked controversy. But experts say it's too early to predict employer response to the Patient Protection and Affordable Care Act.

"Employers and employees will be doing the math themselves and will be making decisions that will be affected by what's available and what it costs," says Helen Darling, the president and chief executive officer of the National Business Group on Health. "It's hard to tell right now what that is going to look like. There are so many variables in play."

WHAT THE SURVEY SAID

Darling says she didn't believe the findings from either the McKinsey study or the CBO analysis were particularly meaningful because employer actions will likely be driven by how fast the exchanges can be up and running, how well they are operated and their cost to employers. Employers with more than 100 employees will not even be eligible to participate in exchanges until 2017, leaving a long road until the ultimate decisions need to be made.

McKinsey itself has issued a follow-up statement saying that its study was not intended as a predictive economic analysis and should not be compared to studies, such as the CBO's, which used economic modeling.

Instead, the firm stated in the announcement that the study "captured the attitudes of employers and provided an understanding of the factors that could influence decision making related to employee health benefits."

Bradley Herring, an associate professor in health policy and management at Johns Hopkins University, says the McKinsey study and the CBO analysis might not be as inconsistent as it appears because the studies examine different metrics.

"I think most people recognize that it's going to be the small firms with low-wage workers that are most likely going to drop, and so a statistic of employers is going to be very different from a statistic for employees," Herring says.

He also questions employers' knowledge of the provisions within the Patient Protection and Affordable Care Act and says opinion-based results need to be taken with a grain of salt.

"It's kind of hard to put too much stock in what employers are saying they are [planning on doing] two years from now, as opposed to what they are really going to do two years from now when things are more developed," he says.