Posted by: Doug Henwood | June 6, 2011

Bye-bye employer health insurance

McKinsey is out with the results of a survey of 1,300 employers (How US health care reform will affect employee benefits), and the lead finding is a shocker: a third or more are likely to drop health insurance coverage for their workers as Obamacare takes effect. Clearly, not all bosses fully understand the economics of the new health insurance universe. Right now, 30% of respondents to McKinsey’s survey “will definitely or probably stop offering ESI in the years after 2014”—but 50% of those with “high awareness of reform” will do so. (The CBO has been assuming that just 7% of insured workers will be affected.) Almost all workers are likely to stay with their current employers even if they lose coverage—what else are they going to do, really?—though most expect “increased compensation” to offset their having to pay for insurance on their own (and how likely are they to get that?).

In the short term, this could provoke a real social emergency, as scores of millions are thrown onto the private individual insurance market and forced to pay $1,000 a month for crappy coverage. But this could vastly increase the constituency for a single-payer scheme, such as Medicare for All—assuming our rulers don’t destroy Medicare first.

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Responses

  1. A lot of people are paying $800 + for crappy insurance even with employer co-pays.

  2. A lot of people now have $5000 deductibles while their employers are eligible for 35% tax credits from Obama’s reforms. And yeah, we can TRY to find new jobs, but how do we know benefits won’t erode there, too? Starting to feel like I live in a third-world country……

  3. Doug or anybody else, could you recommend a good comprehensive source for explaining what exactly Obamacare entails, hows its going to work (or most likely not). All I really know about is the individual mandate. Would be a great topic for the radio show.

  4. And with the subsidies, we’ll all be paying a lot so that people can have crappy insurance.

  5. The issue here is that at least some plans will be taxed because that was what a bunch of free market types decided was a good idea.

    My trusted source for healthcare policy info (aka my husband) tells me that the expectation at large HMOs is that employers who expect to take a serious hit from this are likely to go over to self funded plans, which have their own problems.

    Also likely is that employers will move to cheaper plans which in the real world means the High Deductible shite. This is precisely what the free market types think will save us all because then consumers wil wisely choose the most cost effective medical care and competition will drive down prices.

    Wanna buy a bridge?

  6. McKinsey won’t release their methodology for this study, so I’m pretty suspicious of the findings. My guess is that McKinsey are playing politics.

  7. Speaking of health care, did you see this incredible but ignored study:

    http://www.cjr.org/campaign_desk/a_missing_health_policy_story.php

  8. [...] transparently not so good.  Doug Henwood has had a few posts, one at Jacobin, and the others on his blog, getting into the specifics of [...]


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