More Evidence That Employers Will Drop Coverage
The Wall Street Journal reports this morning on a study by consultants at Deloitte showing that a large number of businesses are viewing Obamacare as an opportunity to “head for the exits” and stop offering health insurance coverage altogether:
In all, 9% of companies in the Deloitte study said they expected to stop offering insurance in the next one to three years….But around one in three respondents said they could decide to stop offering health coverage if they find that the law requires them to provide more generous benefits than they do at the moment; if a tax on high-cost plans takes effect in 2018 as scheduled; or if they conclude that the cost of penalties for not providing insurance could be less expensive than paying for benefits.
The Deloitte survey further reinforces the numerous prior studies, papers, briefs, reports, employer questionnaires, consultant presentations, surveys, op-eds, interviews, quotes, and comments from other prominent Democrats suggesting that employers will drop coverage in numbers far greater than the White House lets on, resulting in trillions of dollars of added federal costs. Even Jon Stewart, in an interview with Secretary Sebelius in January, would not believe the Administration’s line that employers would keep offering coverage: Stewart stated that there would likely be a “big dump” by employers into Exchanges, meaning Obamacare would become “sort of, a back door, of government, not a takeover necessarily, but of a government responsibility for the health care.”
On a related note, a brief follow-up to last week’s post on consulting firm Truven’s “analysis” of whether employers will benefit from dropping health coverage for their employees or not. We pointed out at the time that the report did NOT take into account the impact of federal insurance subsidies on firms’ drop-or-no-drop calculus. Sarah Kliff responded by saying that according to Truven, most people in the study will not qualify for insurance subsidies due to their income.
There are several problems with this claim, and the study. First, most Americans WILL qualify for subsidies. According to the Census Bureau, there are 266.5 million individuals under age 65. Of those, 169.2 million, or 63.5 percent, have incomes under 400 percent of the federal poverty level – the threshold under which individuals can receive insurance subsidies. But at no point in the Truven study does the paper note that the population being studied is asymptomatic from the nation as a whole. Making supposedly-generalizable claims that “employers who choose to cut plans as a perceived cost-saving measure will not benefit as much as they might assume” – and having those trumpeted in the press – based on an incorrect and faulty premise (i.e., that most workers nationwide won’t qualify for subsidies) is highly misleading, and severely flawed.
There’s also an ironic footnote here. Some may recall that last year McKinsey put out a study – one which, unlike the Truven analysis, suggested that a large number of employers would drop coverage. Democrats immediately cried foul, and Max Baucus and others sent letters promising an investigation and demanding McKinsey publicly release its methodology. Yet surprisingly, given the obvious flaws in the Truven study, Chairman Baucus has yet to issue a similar letter demanding the company explain its highly dubious conclusions. I only wonder: Why might that be…?