With insurance enrollment up, most employers don't plan to drop coverage in 2014

A survey finds only about 2% will "very likely" stop offering health benefits when insurance exchanges kick in.

By — Posted Aug. 22, 2011

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Enrollment in employer-sponsored health insurance plans already is on the rise, and most companies surveyed by New York-based consulting firm Mercer say they will continue to cover workers and their families even after state-based health insurance exchanges launch in 2014.

Mercer found only about 2% of employers said they were "very likely" to send employees to the exchange for health insurance, a number basically unchanged from the previous year. An additional 6% said they were "likely" to do so.

Beth Umland, director of research for health and benefits at Mercer, said the survey of about 900 employers, conducted in June, provides a good window into what employers will do because it surveys companies of all sizes in a nationally representative sample.

"Large and small employers respond very differently," she said. "Once an employer has about 200 employees, they almost invariably provide a health plan. Smaller employers are less likely to offer a health plan in the first place."

The employers Mercer surveyed also indicated enrollment in their health plans already is on the upswing -- by about 2% from a year ago -- due in part to a provision in the Patient Protection and Affordable Care Act that allows adult dependents to be enrolled in their parents' plans until age 26.

"That provision did exactly what it was supposed to do: get more people covered," Umland said.

Other consulting firms, government agencies and think tanks have released estimates of how many employers will stop sponsoring health benefits for their workers in 2014. The Congressional Budget Office predicted that about 7% of workers will lose employer-sponsored coverage and buy it from the exchanges instead.

A McKinsey report released in June suggested that as many as one-third of employers would stop offering health benefits in favor of sending their employees to get coverage in the exchanges. However, after getting political backlash over its findings, the company noted that its analysis was "not predictive."

In a survey of 1,400 employers released in November 2010 by the Willis Group, another large benefit consulting firm, about 17% of companies said they were "very likely" or "somewhat likely" to send their employees to the exchange for coverage and increase salaries by the amount they currently pay for the employees' premiums.

Mercer and Willis also reported that employers are worried about what reform will cost them.

Michael Barton, CEO of Willis' North American benefits practice, said the most consistent response from the firm's survey was that reform would be expensive.

"The vast majority of people simply believe reform is going to increase costs, that it won't help, it will increase the cost of insurance," he said.

The survey asked if reform might eventually save money because of preventive care coverage or other elements that would take time to have an effect. Seventy-one percent said it never would save money.

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Growing enrollment

Most employers are seeing health insurance enrollment rise, and they expect to keep health benefits going even after reform is fully in place in 2014.

Estimated growth in 2011 with extended dependent coverage

15%: Not applicable -- in compliance before 2011
21%: Enrollment increased by less than 1%
40%: Increased 1% to 2%
11%: Increased 3% to 4%
13%: Increased 5% or more

Likelihood of terminating medical plans

47%: Not at all likely
46%: Not very likely
6%: Likely
2%: Very likely

Source: Mercer, June 2011 survey of employers (link)

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External links

Employer survey on the effect of the Patient Protection and Affordable Care Act on health insurance enrollment, Mercer, August (link)

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