Thirty percent of businesses that offer employer-sponsored insurance will drop it after 2014, when federal health care reforms kick in, according to a McKinsey & Co. survey.
That number jumps to more than 50 percent among employers with a high awareness of reform, according to the management consulting firm.
At least 30 percent of employers “would gain economically” by dropping coverage, even if they compensated employees with other benefit offerings or higher salaries, according to the survey.
“I was surprised at the number,” but not at the sentiment, said Laurie A. Ehlbeck, state director of the New Jersey chapter of the National Federation of Independent Business. “If costs go up under the new model, our members will probably consider dropping or changing their health benefits model, rather than laying off employees or closing their doors.”
In contrast to the McKinsey & Co. survey, Congressional Budget Office and other studies have suggested only about 7 percent of businesses would drop their coverage after 2014. The significant difference in results is due to the wider range of questions asked in the McKinsey study and the greater awareness of its respondents, according to the consulting company.
“I have viewed skeptically reports of little to no change, especially among smaller employers,” said Christine Stearns, the New Jersey Business & Industry Association’s vice president of health and legal affairs. “In the next two years, many small employers will be forced to re-evaluate the way they’re purchasing and offering health care coverage.
“But many will watch very closely to see what other companies do. No one wants to be the first or last company to drop employer-sponsored health insurance.”