Families USA Debunks Misleading Health Care Study

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Opponents of the Affordable Care Act are latching onto a new "study" from the firm McKinsey and Co. implying that the health reform law will prompt as many as half of all U.S. employers to drop employee health coverage, pay a penalty and dump their workers into new health insurance exchanges.

The law requires that state-based health insurance exchanges be up and running by 2014. The exchange is a marketplace where individuals and small businesses can review and choose from a variety of health plans from different insurance providers. Individuals who do not receive insurance through an employer can purchase health coverage on the exchange with the help of public subsidies based on income.

So should we be worried by the McKinsey study? Will employers start eliminating employee health benefits come 2014? In a word, no. As Ron Pollack of Families USA explains in a recent blog post:

This is pretty powerful stuff. Except of course for one teeny, tiny, little detail: It's not true.

Don't believe me? Take a look at the statement McKinsey released when pressed to share their methodology:

The survey was not intended as a predictive economic analysis of the impact of the Affordable Care Act. Rather, it captured the attitudes of employers and provided an understanding of the factors that could influence decision making related to employee health benefits.

The study – according to McKinsey's own belated statement – actually tells us nothing about how the Affordable Care Act will affect employer behavior.

But worse than that, the survey failed to even fairly measure the factors that might influence employer behavior. The survey first "educated" the respondents about the Affordable Care Act, then asked questions. Obviously, if the "education" is incomplete and biased, the survey results are unreliable. Just as one example, the survey failed to point the following out to respondents: if employers drop coverage, employees will be unhappy because they will lose an important tax break (the value of employer-based insurance is not taxed).

So what's actually true?

Late last week, Avalere Health released an analysis citing research from the Congressional Budget Office (CBO), the Lewin Group, RAND, and the Urban Institute that shows most employers won't, in fact, suspend health benefits to employees. They provide a few main reasons:

  1. Employers offer health benefits to recruit and retain employees. The presence of exchanges does not change this motivation.
  2. Employers offer health benefits to boost worker productivity.
  3. There are many intangible reasons why employers offer coverage to employees, such as the value employees assign to the benefit, and the feeling amongst some employers that offering health benefits is the "right thing to do."

Comments

3 comments posted

One bit of evidence that you

One bit of evidence that you don't mention that would seem relevant to me in predicting employer behavior is the experience in Massachusetts with Romneycare.  In fact, don't we have a real-life laboratory where the experiment has been tried and the behavior of employers is known?  What has been the experience with Mitt Romney's experiment?  Is it relevant to the Affordable Health Care Act?  I have heard nothing about widespread employee dumping in Massachusetts, but maybe I have missed the news amidst all of the Caylee Anthony trial obsession. I would like to hear your response.

This a very good point.

This a very good point. Recently, ABC 27 in Harrisburg did a report on the McKinsey and Co. "study" and interviewed Sharon Ward of the Pennsylvania Budget and Policy Center. One of the points Sharon made was summed up on the television station's web site: "Ward said this study does not agree with any other study out there, or with real world experience. She said after five years of health care reform in Massachusetts, the number of people covered by employer health insurance actually increased." You can view the full ABC 27 report here.

I think we should not worry

I think we should not worry about that McKinsey Report. It is impossible to eliminate or remove the employee's health benefits. It might get cheaper but not totally gone

James M. Cahill, lawyer

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