Will Employers Drop Coverage?; Administration Argues 5% Premium Increase Not “Significant”
More stories this morning follow up on Phil Bredesen’s op-ed in the Wall Street Journal last Thursday on employers dropping coverage – Inside Health Policy has an analysis (subscription required), and the BNA reports on a discussion of the issue at an American Bar Association conference yesterday. The BNA quotes one benefits consultant as saying many of his clients will stop offering their current health plans as of 2014: “They have done the analysis and said, ‘We’re just going to drop it going forward.’” And the Inside Health Policy story interviews lobbyist Billy Wynne – a former staffer for Finance Committee Chairman Baucus – who believes that the other benefits of employer-sponsored coverage will encourage firms to keep offering insurance, even though he admitted that “if all that affected an employer’s decision to offer coverage was simple math comparing the costs of coverage versus the cost of dropping, then we would expect virtually every employer to drop coverage in 2014.” He continued:
We may see a tipping point scenario, where some large employers in particular sectors make a decision to drop, which then makes it acceptable for their competitors to drop coverage as well. Over time, there’s little question that we will see a gradual decline in [employer-sponsored coverage], but most independent analysis suggests it will be much more gradual than Gov. Bredesen’s arithmetic suggests.
These comments suggest far from complete confidence from a former Baucus staffer in the accuracy of predictions by Democrats – and the Congressional Budget Office – that employer sponsored coverage will be left largely unchanged by the health care overhaul.
Also of note: Comments on premium increases by James Mayhew of HHS’ new Office of Consumer Information and Insurance Oversight (OCIIO), as reported in this morning’s BNA. Asked how significant the impact on costs would have to be for carriers to receive waivers from the new federal mandates included in the health care law, Mayhew responded that “If you have a premium increase of less than 5 percent, I don’t think that’s really a significant increase in premiums.” Some may note that President Obama promised to lower premiums by $2,500 for an average family, not raise them by “only” less than five percent – which for the average employer plan equates to an increase of more than $500 per family per year.