No way to know how many employers plan to quit offering health benefits.
A recent Towers Watson and Co. survey found that 88 percent of businesses polled planned to continue offering health benefits to their workers after health reform kicks in. Most of the media coverage I have seen viewed this as confirmation that the status quo would continue. The bigger news seemed to be a second major finding -- that 43 percent of respondents expect to reduce or drop retiree coverage. That is a big deal, and it will affect a lot of people -- particularly retirees whose investments aren't providing nearly the retirement income they expected. Well, that's all retirees, I guess.
But I'd like to consider the first finding more carefully. I tend to read it in reverse -- that 12 percent of employers have either already decided to drop benefits or are thinking about dropping them. That could put a much bigger load on the new Insurance Exchanges than Congress planned. Depending on timing, it could also put a strain on high-risk pools that are already vastly underfunded.
I also think that the true number of employers mulling over whether or not to stay in the benefits game is much larger than anyone is willing to admit. As we saw from documents pried loose by Rep. Henry Waxman, even some blue-chip companies like AT&T and Verizon stand to save a ton of money by paying relatively modest health care fines and pointing their workers toward the Exchanges.
No business wants to makes it employees uneasy or to lose qualified people to a competitor who offers better benefits. But in an economic downturn, employees aren't going to be quick to jump ship. And what if dropping benefits becomes a trend? Suddenly, staying in the benefits game would put a business at a significant competitive disadvantage. If a couple of big companies make the leap out of benefits, could hundreds, or even thousands, of businesses follow? I don't think anyone really knows.
People who wanted a single payer system might well say, "So what?" to a big jump in the government's role in insurance. I'll concede some advantages to separating health benefits from employment: Portability, for one. Greater responsiveness to individual needs versus employer needs, perhaps. And job loss wouldn't necessarily lead to coverage loss.
But the Obama plan was conceived as a safety net arrangement -- a way in to the system for the millions of people who couldn't find affordable health insurance options. If it becomes a major jailbreak from employer-sponsored coverage, government subsidies will be many times what are contemplated in the bill. And the federal deficit could look even scarier than it does now.
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