Study Finds Almost One in Ten Companies Will Drop Health Insurance
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The Supreme Court’s (SCOTUS) ruling on the Patient Protection and Affordable Care Act (PPACA) has moved the focus of the debate about health care reform from whether the law was constitutional to what will its effects be.
How many businesses (if any) will drop health coverage for their employees and pay a penalty instead?
Consulting company Deloitte will release a study today that estimates that that almost one in ten companies will drop coverage in the next three years. “Around 81% were planning to continue providing benefits, and 10% weren't sure,” according to a Wall Street Journal story.
The percentage of companies dropping coverage could triple, because they're uncertain about how the health care law will be implemented:
But around one in three respondents said they could decide to stop offering health coverage if they find that the law requires them to provide more generous benefits than they do at the moment; if a tax on high-cost plans takes effect in 2018 as scheduled; or if they conclude that the cost of penalties for not providing insurance could be less expensive than paying for benefits.
Another question is how the SCOTUS ruling impacts the federal budget.
The Congressional Budget Office will soon release new projections for the PPACA’s cost. The American Action Forum (AAF) doesn’t think they will change much because “CBO doesn’t yet have all the information needed to resolve the uncertainty.” That information includes what behavioral effects will come from the SCOTUS declaring the individual mandate to buy health insurance to be a tax and how many states will opt-out of Medicaid’s expansion under the PPACA.
AAF estimates that the increase in federal costs from the SCOTUS ruling could be as little as $72 billion to $80 billion if only six states opt out (likely based on governors’ public statements) to as much as a $562 billion to $627 billion increase if all 50 states opted out (highly unlikely). That wide range will add to Congress' and the Administration's difficulties in taming the federal budget deficit.
A third question is how the PPACA will affect employees. For that answer, go back to Sheryll Poe’s post on a recent study that found that they would have to pay almost $13,000 more if their employer drops health insurance coverage.
There’s nothing to cheer about for businesses, the federal government, or workers. It’s more reason to repeal the PPACA and work on real reforms to make health care more affordable.