A new survey of 368 midsize to large companies found that 29% of them are considering terminating their active employee health care plans when Obamacare is full implemented in 2014. Only 71% of employers surveyed said they did not expect to drop their health coverage, while 20% said they did not know and 9% said they were planning to exit.
The latest survey, conducted by Towers Watson, echoes an ealier survey by McKinsey & Co. finding that 30% of private-sector employers were planning to drop their employee health insurance coverage by 2014. When the Congressional Budget Office crunched Obamacare's spending numbers, they estimated that only 7% of employees currently covered by employer-sponsored plans would lose their plans.
The gap between the CBO estimates and the employer surveys could end up raising Obamacare's price tag by hundreds of billions a year. For every employee that loses their health insurance at work, the federal government would have to pay thousands in subsidies to help that individual, and often their family, buy insurance on the yet-to-be-created health exchanges. If the percentage of employers that drop their health plans is near 30 percent, Obamacare's price tag would rise by almost $1 trillion.
Paul Fronstin of the Employee Benefit Research Institute suggests that if a critical mass of companies starts to drop coverage, many more will them. Fronstin told the Associated Press: "If one employer does it, other likely will follow."
The Obama administration disputed the Towers Watson findings pointing to increased employer health coverage in Massachusetts after Romneycare became law. But after rising in 2008, employer coverage levels have since fallen back to pre-reform rates in Massachusetts. And Romneycare did not include a Cadillac Tax on expensive health policies like Obamacare does. The Towers Watson survey found that 43% of employers believed they would be subject to the Obamacare excise tax on expensive health plans.
