WTF?????? Some employers consider ending health coverage

Discussion in 'Economics' started by misterno, Aug 24, 2011.


    INDIANAPOLIS (AP) -- Nearly one of every 10 midsized or big employers expects to stop offering health coverage to workers once federal insurance exchanges start in 2014, according to a new survey from a large benefits consultant.

    Towers Watson also found in a survey completed last month that an additional 20 percent of the companies are unsure about what they will do.

    Another big benefits consultant, Mercer, found in a June survey of large and smaller employers that 8 percent are either "likely" or "very likely" to end health benefits once the exchanges start.

    Employer-sponsored health insurance has long been the backbone of the nation's health insurance system. But the studies suggest that some employers, especially retailers or those offering low wages, feel they will be better off paying fines and taxes than continuing to provide benefits that eat up a growing portion of their budget every year.

    The exchanges, which were devised under the health care overhaul, may offer an alternative for their workers. These exchanges aim to provide a marketplace for people to buy insurance that can be subsidized by the government based on income levels.

    A large majority of employers in both studies said they expect to continue offering benefits once the exchanges start. But former insurance executive Bob Laszewski said he was surprised that as many as 8 or 9 percent of companies already expect to drop coverage a couple of years before the exchanges start.

    Such a move comes with potential payroll-tax headaches and could subject firms to fines. It also would give their employees a steep compensation cut if companies don't raise pay in exchange for ending coverage.

    "Dropping coverage is going to be very difficult for these (companies) to do," said Laszewski, a consultant who was not involved with the studies.

    Towers Watson's Randall Abbott said the survey results should be seen as a snapshot of how companies are thinking now. They can't be viewed as a final decision because there are still many unresolved variables. No one knows what the exchanges will be like or whether consumers will accept them, and companies may change their thinking once they learn more about the overhaul.

    The health care overhaul also faces court challenges, and President Obama is up for re-election next year, two more variables that could shape what happens in 2014.
  2. This should come as no surprise as health care costs escalate much faster than inflation. Consider in 2000 that 69% of all employers offered health insurance while in 2010 it is down to 60%.

    Simply put, employers esp. small ones want out of this costly burden and will shift it to whoever they can even if it means a small fine.

  3. I don't think ANY employer should offer health coverage. It screws up the natural demand/supply pricing dynamics.
  4. Agree, they don't provide auto insurance, so why should they provide health insurance. Also, the biggest by far tax loophole (~$180 billion/yr) is employees receiving health insurance but not having to pay taxes on it.

  5. IMO it was a mistake tying health insurance to employment to begin with. The link between payer and cost should never be obfuscated like that, especially for something so important and costly.
  6. Five years ago, the expected crisis in health care costs for the economy were 8 times worse than the pension costs. I am sure the numbers are worse today.

    Socialism is dead. Someone has to start putting wood on the fire!
  7. Lucrum


    Interesting thought.
  8. Getting rid of health insurance helps the economy and lowers health insurance prices. It works like this.

    Company gets rid of health insurance.
    Sick employees die off.
    Healthy unemployed people take over the job.
    Unemployment cured.
    When less health insurance is bought, prices come down making it more affordable which puts more money in peoples pockets which goes to buying other consumer goods which improves the economy which makes more employers need more employees and since unemployment is down, employers need to pay more to get employees which means higher wages.
  9. gucci


    It really is. Just as it is unparalleled in its shortsightedness.
  10. where did you get this info? Can you give us a link?
    #10     Aug 24, 2011