How will health care reform affect employer benefits?

[eridani]

How US health care reform will affect employee benefits

https://www.mckinseyquarterly.com/How_US_health_care_reform_will_affect_employee_benefits_2813

US health care reform sets in motion the largest change in employer-provided health benefits in the post?World War II era. While the pace and timing are difficult to predict, McKinsey research points to a radical restructuring of employer-sponsored health benefits following the 2010 passage of the Affordable Care Act.

Many of the law?s relevant provisions take effect in 2014. Our research suggests that when employers become more aware of the new economic and social incentives embedded in the law and of the option to restructure benefits beyond dropping or keeping them, many will make dramatic changes. The Congressional Budget Office has estimated that only about 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014. However, our early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes, as well as other proprietary research, found that reform will provoke a much greater response.

Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014.

Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.

<snip>

Our survey found, however, that 45 to 50 percent of employers say they will definitely or probably pursue alternatives to ESI in the years after 2014. Those alternatives include dropping coverage, offering it through a defined-contribution model, or in effect offering it only to certain employees. More than 30 percent of employers overall, and 28 percent of large ones, say they will definitely or probably drop coverage after 2014.

But on the other hand--

The White House Blog
http://www.whitehouse.gov/blog/2011/06/08/getting-insurance-work

A central goal of the Affordable Care Act is to reduce the cost of providing health insurance and make it easier for employers to offer coverage to their workers. We have implemented the law at every step of the way to minimize disruption and maximize affordability for businesses, workers, and families. And we agree with experts who project that employers will continue to offer high quality benefits to their workers under the new law. This one discordant study should be taken with a grain of salt.

Comment by Don McCanne of PNHP: Republicans contend that this new McKinsey study shows that the provisions of the Affordable Care Act (ACA) will cause a massive transfer of employee health coverage from employer-subsidized plans to new government-subsidized plans that will be made available through the state insurance exchanges. Democrats contend that the ACA program design will prevent this shift. This either/or debate misses the point. The massive shift to government-subsidized private plans will occur under ACA. The uncertainty is only in how fast that will be.

This discussion is important because one of the main strategies was to establish policies that would ensure the perpetuation of the employer role in funding health care, thereby avoiding the necessity of infusing yet more taxpayer funds into health care. Ultimately, a taxpayer-financed system would be more equitable and efficient, but, until we have that, the employer funds are an important transitional resource to help fund our health care.

As the financing responsibility shifts more to the government, there is also a responsibility for the government to demand greater value in its health care purchasing. That will be difficult under ACA since a government-managed exchange of private health plans does not provide effective means of eliminating the administrative and clinical waste that typifies our dysfunctional U.S. system of financing health care.

The rate of employer-sponsored coverage continues to decline. The quality of employer-sponsored health plans continues to deteriorate as more and more costs are shifted to employees, making the plans less desirable. The opportunity offered to employers by the safety-valve of the state insurance exchanges will cause an acceleration in the decline of employer-sponsored coverage as employers realize that shifting to a government-financed program simply represents a wise business decision for them.

Once the government is stuck with the bill for these private exchange plans, maybe the light will finally go on. Why are we paying so much for these inadequate and wasteful plans when we could have a more efficient and effective program with better benefits - a single payer national health program? Fortunately, the emergence of this epiphany will not be a matter of whether, but how soon.

[left is right]

1. Back in the 50s I remember my dad saying

that health insurance should never be tied to employment. He recognized that it would limit people’s ability to seek better employment. He also thought that when times got tough (as it does periodically) that coverage would be scaled back.

[Lasher]

3. Your dad had vision.

It is easier to recognize this truth today than it was back then.

[antigop]

2. Read the following from TPM on this whole issue

http://tpmdc.talkingpointsmemo.com/2011/06/multiple-sources-throw-controversial-mckinsey-health-care-study-under-the-bus.php

The political damage to President Obama's health care law may already be done. But there's a curious backstory to the report this week from a major consulting firm study that found "ObamaCare" would lead to fairly dramatic unintended consequences.

The consulting firm McKinsey & Company was thrust into the political spotlight Tuesday after it published a study -- at odds with the expert consensus -- finding that, once fully implemented, the health care reform law will drive huge numbers of employers to drop or dramatically restructure their companies' health care benefits.

The predictable fallout led Democrats, and several reporters, to press McKinsey for the survey itself -- a request McKinsey has declined on the grounds that the material is proprietary.

But multiple sources both within and outside the firm tell TPM the survey was not conducted using McKinsey's typical, meticulous methodology. Indeed, the article the firm published was not intended to give the subject matter the same authoritative treatment as more thorough studies on the same topic -- particularly those conducted by numerous think tanks, and the Congressional Budget Office, which came to the opposite conclusion. And that's created a clamor within the firm at high levels to set the record straight.

[JTFrog]

4. +1

"This particular survey wasn't designed in away that would allow it to be peer review published or cited academically," said one source familiar with the controversy.

~~~~

Another keyed-in source says McKinsey is unlikely to release the survey materials because "it would be damaging to them."

[eridani]

5. The political damage occurred in 2010, when Obama refused to forcefully defend

--the Medicare part of it, thereby allowing the Repukes to lie about it. It didn't help that there were almost no frontloaded benefits. People don't really give a shit about lists of microconstituencies that benefit early, given that most are not likely to be on them.