30 percent of companies say they’ll stop offering health plans

By Russ Britt, MarketWatch
Posted June 06, 2011, at 10:56 p.m.

LOS ANGELES — Once provisions of the Affordable Care Act start to kick in during 2014, at least three of every 10 employers will probably stop offering health coverage, a survey released Monday shows.

While only 7 percent of employees will be forced to switch to subsidized-exchange programs, at least 30 percent of companies say they will “definitely or probably” stop offering employer-sponsored coverage, according to the study published in McKinsey Quarterly.

The survey of 1,300 employers says those who are keenly aware of the health-reform measure probably are more likely to consider an alternative to employer-sponsored plans, with 50 percent to 60 percent in this group expected to make a change. It also found that for some, it makes more sense to switch.

“At least 30 percent of employers would gain economically from dropping coverage, even if they completely compensated employees for the change through other benefit offerings or higher salaries,” the study says.

It goes on to add: “Contrary to what employers assume, more than 85 percent of employees would remain at their jobs even if their employers stopped offering (employer-sponsored insurance), although about 60 percent would expect increased compensation.”

A number of competitors will emerge in the insurance market once reform provisions start to take effect, according to the McKinsey Quarterly study. These firms will be needed to provide a transition for those moving from employer-sponsored insurance to other coverage options.

Insurers will have to adapt to new realities and look for ways to keep the policy holders they have, the study says, but that shouldn’t be difficult. “Our research shows that more than 70 percent of employees would stay with their insurer if it offers a seamless transition and appropriate products. Each payer also must understand how changing employer-benefit strategies will shift the r isk profile of its membership and set prices appropriately.”

http://bangordailynews.com/2011/06/06/health/30-percent-of-companies-say-they%e2%80%99ll-stop-offering-health-plans/ printed on September 17, 2014