In a move that should surprise absolutely no one, a new study reveals that most employers stand to save a lot of money by dropping health coverage and sending their newly uninsured employees to the exchanges.
The number crunchers over at Lockton Benefit Group – who know a little something about employee benefits – polled 130 different employee benefit plans for an actuarial modeling study that clearly shows the health reform law lays a load of new costs on employers. So many, in fact, that the law actually creates "a financial incentive for some employers to terminate health plans in 2014 when insurance exchanges take effect."
You can check out the full report here:
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In fact, Lockton Benefit group President Mike Brewer took his case to Congress. During a House subcommittee hearing, Brewer testified, "Across all industry segments in our book of business, clients will have a significant financial incentive to terminate their group coverage once the Insurance Exchanges present employees with another subsidized health insurance option. The vast majority of our clients currently spend far more on health insurance per employee than the nondeductible penalty under the 'play or pay' mandate. By 2014, this gap will be much larger still."
Put quite simply, employers will save money paying the penalty rather than insuring their employees. And while this isn't exactly news, seeing it put in such stark terms – by employers themselves – is sobering, to say the least.
So does that mean we'll see a flood of plan – and job – eliminations come late 2013? Not necessarily, and Brewer backed this up during his testimony. But that doesn't exactly mean we won't either. While most employers, just like everyone else, is standing pat with the "wait and see" approach, no one wants to be left behind either.
As he relayed to the House committee, his clients are telling him, 'We won't be the first to drop coverage, but we won't wait to be third, either.'"
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