New health law, will emplyers drop coverage

Will reform law encourage employers to drop health plans?


The debate continues over what the health insurance landscape will lool like after the bulk of the provisions associated with the 2010 Affordable Care Act go into effect in 2014.

It’s a big issue and not just because of the 2012 election. There are signs that major changes lay ahead for consumers and health care providers alike. Making adjustments to your practice will be the key to flourishing in the new environment.

The feeling in Washington is that despite Republican opposition, and GOP attempts in the House to withhold funding for portions of the reform program, the Affordable Care Act is a train too big to stop at this point. That’s what we heard last week from Laura Groshong, a clinical social worker from Seattle and director of government relations for the Clinical Social Work Association. She had just returned from Washington.

So it’s not surprising that Senate Democrats are challenging a controversial report released earlier this month that contends up to 30% or more of employers will drop employer sponsored insurance (ESI) plans after full implementation in 2014.

The report, by McKinsey & Company, a global management consulting firm, argues: “The shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike.”

Their conclusion was based on a survey of 1,300 employers conducted earlier this year. The authors said 30% of employers would either “definitely” or “probably” stop offering ESI plans, and up to 60% will “pursue some alternative to traditional ESI.”

Yesterday, Senate Finance Committee Chairman max Baucus (D-Montana) demanded that McKinsey release its methodology in coming up with that 30% figure. The White House is equally irate.

In the New York Times today, columnist Paul Krugman said McKinsey has refused to disclose how the survey was conducted and suggested that the results were deeply flawed. But it makes sense that if everyone is required to carry health insurance, employers may back away from the benefit.

Even the Congressional Budget Office estimated that 9 million to 11 million would lose ESI but 6 million would be added to ESI rolls. That’s at most a 5 million loss of ESI benefits - and that’s nothing to sniff at, either.

Regardless, many health care providers will be faced with learning the ins and outs of new plans that will be offered to the public, some of them high deductible options. Providers may find that they have to intensify their marketing efforts if more people have to pay out of pocket for care, at least early in the year.

It makes sense that there will have to be some adjustments on both sides of the ledger.

from Psychotherapy of Finance