Will Employers Drop Health Coverage or Is It Just Advised?
A Wall Street Journal story published Thursday reports that several companies working with lawmakers on health reform analysis may have been misrepresented in a House committee report.
The House Committee on Energy and Commerce filed a report that investigates how health reform affects employer-provided health coverage. The report is a collection of conclusions based on several internal documents the committee received from a council of individuals that represent some of the largest employers in the country.
The President’s Council on Jobs and Competitiveness, created in January 2011, includes Southwest Airlines, UBS, General Electric, and several others that employ thousands of workers nationwide.
Based on the information the committee received from this council, the report summed up its findings with this statement: “the [health reform] law will increase costs, make future planning for hiring and expansions difficult due to the uncertainty created by the law, and could ultimately lead to employers dropping health insurance coverage for their employees.”
The implication that employers would ultimately drop health coverage stems from estimates that provisions in the Affordable Care Act will drive up health insurance costs and that the employer mandate, otherwise known as the “pay or play” clause, will create a “financial incentive for companies to stop offering health insurance because ‘the penalty for paying is much lower per employee than the average cost of playing…”
The report credits this specific language to an internal presentation conducted by American Express.
However, the Wall Street Journal, which attempted to contact several of the companies mentioned in the report, found no conclusive evidence that health reform will drive employers to drop coverage in droves.
Louise Radnofsky writes for WSJ:
“Several who were mentioned in the report told The Wall Street Journal they have no plans to drop their health-insurance coverage…Whether the health-care overhaul will prompt employers to drop their health insurance is a subject of intense debate. Several studies have found that most employers don’t expect to do so once workers have the option of buying policies through insurance exchanges, set to begin in 2014. But consultants say employers with lower-wage workers may be more likely to shift workers to exchanges.”
Radnofsky’s investigation implies that evidence cited in the final committee report may be skewed or misleading because it is actually analysis given to these employers from benefits consultants, and that the employer’s intention does not necessarily reflect the advice or research presented to them.
For example, Radnofsky reports, Comcast received a report in April 2010 from Mercer that “projected additional health-care costs for the company of up to $48.3 million under the new system as more employees enrolled in the company plan to ensure they had health insurance. The report predicted that ‘some companies will terminate their plans and exit’ the health-care market.’
“A person close to Comcast said the company had told the congressional committee that the company didn’t endorse Mercer’s findings and that it hasn’t changed course in its health-care-coverage policy in response to the overhaul law.”
The report of course was followed by partisan suspicions and the Republican lawmakers who reportedly championed it are being accused of sidestepping or omitting facts.
“Democrats on the Energy and Commerce committee had previously accused Republicans of harassing companies that were participating in the president’s jobs council,” Radnofsky writes. “The top Democrat on the committee, Henry Waxman of California, criticized the final report as ‘replete with misleading, inaccurate, out-of-context and contradictory statements.’”
“The report conveniently omits the responses from companies that said health reform would not increase costs,” Waxman said.
The “will they or won’t they drop coverage?” debate was seemingly ignited last June, when McKinsey and Co. revealed a controversial survey that found one-third of employers will most likely drop health coverage after health exchanges are established in 2014.
The firestorm spread to Washington when Democratic lawmakers quickly demanded for McKinsey to reveal the methodology behind its survey. Less than two weeks later, McKinsey dropped the curtain on its findings.