When the PPACA was forced through Congress with virtually no reading of the bill until after passage, doomsayers were predicting the end of the world for American health care—especially for employers and small businesses. Americans were told by their elected representatives and the administration that this bill would be “good for the nation.”
However, the bill was quickly scrutinized and found to be lacking in many areas pertaining to protection of American business relative to employee benefits.
A year later, it appears that Chicken Little wasn’t far off the dime when it comes to the pending loss of benefits for the American worker come 2014. Unless the Supreme Court overturns the law as unconstitutional, or Congress in its infinite wisdom decides not to fund a major portion of the proposed implementation of various sections of the law, or the current HHS Secretary has an epiphany about how bad the law really is and decides not to provide any new interpretations of individual statutes, employees will start losing benefits in the near future.
According to McKinsey, 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. U.S. 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 passage of the Affordable Care Act. Many of the law’s relevant provisions take effect in 2014--30 percent of employers will definitely or probably stop offering [employer-sponsored insurance, or ESI] in the years after 2014.
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, 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.
According to Market Strategies International, the results are eye opening and could severely impact a sizeable number of US workers and their families--potentially 10 million people no longer having access to health benefits through their employers in 2014. A significant number of employers reported, with health care reform, it may not benefit them competitively to offer employee health care benefits. The reality is that companies of all sizes are reviewing their options and considering reductions. Here are some notable findings regarding 2014 employer health benefits intentions:
- Among companies currently offering health care benefits (covering 92 percent of all workers):
- 76 percent will continue to do so
- 15 percent will offer coverage to some full-time employees
- 9 percent will stop doing so
- Among companies currently not offering health care benefits (covering 8 percent of all workers):
- 28 percent will begin to offer them in 2014
- 19 percent will begin to offer coverage to some full-time employees
- 53 percent will not begin to offer health care benefits
- Taken in total, there will be an estimated 10% net decline in access to employer-sponsored health benefits as of January, 2014. (13 percent of U.S. workers will lose employer-sponsored benefits; 3 percent will gain employer-sponsored benefits.)
Many small and large firms see the availability of coverage to employees through Exchanges as the potential to exit the health benefits arena without leaving employees lacking in coverage options. For some large firms, in particular, there is a desire to pay to walk away, according to Marketing Strategies International. When employers see what the bottom line is to implement health care on a global scale, you can bet they will be evaluating the merits of coverage for marginal employees, and for “non-essential” or voluntary benefits. That spells more cost for individual employees and their families. The sky isn’t falling yet, but Chicken Little may have had some keen insight.