June 15, 2011
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Studies Suggest Employer-based Health Insurance Erosion

A new McKinsey & Company report predicts that PPACA will lead to "a radical restructuring of employer-sponsored health benefits."  The survey found that the health care reform law will lead 30 percent of employers to “definitely or probably” discontinue their employee health insurance plans after 2014, when the law's major provisions begin. Among employers with a high awareness of the Patient Protection and Affordable Care Act, the results were even more pronounced; between 50 percent and 60 percent will pursue an alternative to traditional employer-sponsored insurance. The report reaffirms the explanations made in a paper by Douglas Holtz-Eakin and Cameron Smith last year that PPACA provides strong incentives for employers to drop health insurance for their employees. 

However, the White House dismissed the report. Nancy-Ann DeParle, Assistant to the President and Deputy Chief of Staff, posted a blog titled “Getting Insurance at Work,” calling the McKinsey study “an outlier.” Employers will continue to offer health insurance to attract top talent, and PPACA makes it easier for them to do so by “tackling health costs and supporting small businesses,” DeParle wrote.

NAIFA Staff Contact: Diane Boyle, Vice President – Federal Government Relations, at (703) 770-8252.