Firms to cut health plans as reform starts!

LOS ANGELES, Kalifornia - June 6, 2011 - Once provisions of the Affordable Care Act start to kick in during 2014, at least three out of every 10 employers will probably stop offering health coverage, a survey released Monday shows.

While only 7% of employees will be forced to switch to subsidized-exchange programs, at least 30% of companies say they will “definitely or probably” stop offering employer-sponsored coverage, according to the study published in McKinsey Quarterly.

The survey of 1,300 employers says those who are keenly aware of the health reform measure probably are more likely to consider an alternative to employer sponsored plans, with 50%-60% in this group expected to make a change. It also found that for some it makes more sense to switch.

“At least 30% of employers would gain economically from dropping coverage, even if they completely compensated employees for the change through other benefit offerings or higher salaries,” the study says.

It goes on to add, “Contrary to what employers assume, more than 85% of employees would remain at their jobs even if their employers stopped offering (employer sponsored insurance), although about 60% would expect increased compensation.”