By Sharon Begley
NEW YORK, Sept 9 (Reuters) - As many as 37 million Americanswho receive health coverage through employers may be better offwith the government-subsidized insurance plans that will beoffered under President Barack Obama's healthcare reform law fornext year, according to a study released on Monday.
The analysis, compiled by researchers at Stanford School ofMedicine and published in the journal Health Affairs, suggeststhat some employees may choose to dump the coverage they receiveat work. It also points to a potential counter-trend to surveysof employers, which show that up to 30 percent would considerterminating health coverage for their workers within the firstfew years of "Obamacare."
"There is definitely going to be some pressure in thatdirection," said Thomas Buchmueller, a professor of insurance atthe University of Michigan's Ross School of Business, who wasnot involved in the study.
"Workers could say, 'we appreciate that you offered uscoverage all these years, but we'll be better off on theexchanges, so give us the cash and we'll go.'"
That scenario, which would cost the federal treasurybillions of dollars above what it has already projected,reflects the complicated financial carrots and sticks at theheart of Obama's 2010 Affordable Care Act (ACA).
On the one hand, it requires large employers with 50 or moreworkers to offer health insurance or pay a $2,000-to-$3,000annual penalty per full-time worker. About 170 million Americanshave health insurance through their own job or through a familymember's; such coverage is available to 80 percent of full-timeworkers.
On the other, the law allows workers to buy coverage on newstate-based exchanges and receive federal subsidies to help paythe premiums and deductibles, if their employer-sponsoredinsurance is deemed unaffordable according to a governmentcalculation.
Roughly "37 million people would be financially better offswitching to the exchange" from employer-sponsored insurance,said Dr. Jay Bhattacharya of Stanford School of Medicine, wholed the study.
"The reason is that these workers would qualify forsubstantial subsidies to buy exchange insurance," he said. As aresult, the subsidized Obamacare premium will be less than whatthey pay for employer-based insurance. The cost to the federaltreasury if all 37 million switch: $132 billion a year insubsidies, according to the study.
If premiums for employer-based coverage rise by even $100 ayear, another 2.25 million people would be better off,Bhattacharya and his colleagues calculate. That would increasefederal outlays another $6.7 billion.
"Pure economic benefit for workers may or may not be a goodenough reason for employers to drop coverage," Bhattacharyasaid, since employers will pay a penalty starting in 2015 fornot providing insurance. "Our point is that total federalgovernment obligations are incredibly sensitive to the decisionsmade by employers."
Policy makers, the Stanford team concludes, "should plan forthe possibility that the exchange subsidies may end up costingthe federal government much more than currently projected."
The Stanford team did not receive outside funding for theirstudy.
For now, the vast majority of employers, especially largeones, say they are not dropping health benefits. A second studyin Health Affairs concludes that the net increase or decrease inthe number of workers with employer-sponsored health insurancewill be only a percent or two.
That jibes with a survey released last month by theNational Business Group on Health, which represents largeemployers. It found that 1 percent were considering movingcurrent employees to exchanges in 2014, and 30 percent might doso after that.
"Large employers are pretty certain they won't be out of thebusiness of offering health insurance for active employees anytime soon," said NBGH president Helen Darling. "It's still goingto be a competitive benefit" in attracting employees.
Obamacare is already being cited as the cause for majorshifts in how employers are providing health benefits, includinga decision by United Parcel Service to drop coverage tospouses of non-union employees who have access to insurancethrough their own jobs.
"Some employers will drop coverage, and more often than notwhen they say it's the result of the ACA, it's probably not,"said Michigan's Buchmueller, who led the study projectingemployer behavior. "Firms have made adjustments to benefits foryears and years, but this is the first time there has been asingle target to blame it on."
- Health Care Policy
- health insurance
- Stanford School of Medicine
- President Barack Obama