According to The Hill, a new report from market analyst firm S&P Capital IQ recently uncovered that most employers will shift their workers from employer-sponsored health plans to the federal and state marketplaces created under the Affordable Care Act. Employee benefits management is a critical component of HR department functions, and many HR professionals may not think that a significant portion of employers will stop offering workers health insurance benefits. However, an analysis of the report by The New York Times suggested the report's prediction may not come true.
Workers May Seek Their Own Health Coverage
S&P Capital IQ examined the costs of employers providing health insurance benefits to workers, and found companies can save billions by asking employees to purchase plans through the healthcare exchanges. In fact, by 2025, businesses could save $700 billion, and – if healthcare inflation continues as it is – this number could actually reach $800 billion or more. According to The New York Times, this $700 billion – saved between 2016 and 2025 specifically – would account for 4 percent of the net worth of the businesses. Ninety percent of workers may no longer receive health coverage from their employer by 2020, the researchers predicted.
The newspaper noted the researchers are considering that since the exchanges now make it possible for those with preexisting conditions to receive affordable healthcare, employees don't necessarily require health insurance through their employers. Michael G. Thompson, managing director at the firm, also suggested that many employers may no longer think the tax incentives for providing health coverage is worth it. Health insurance may end up like private sector company pensions – some may still have them, but it will no longer be as commonplace.
Why Employer-Sponsored Health Insurance May Stick Around
However, Johnson Gruber, a health economist at the Massachusetts Institute of Technology, told The Washington Post that employer-sponsored health insurance may continue to be popular, despite the availability of health insurance through the exchanges. Gruber said employer-sponsored coverage didn't drop in Massachusetts after the state enacted its healthcare reform. Instead, employers expanded coverage.
"The benefits we were giving guys who left employer-sponsored insurance were way more generous than what the federal plan gives them," Gruber said. "And we didn't have much of an employer penalty. I predicted employers would drop coverage."
If Massachusetts is an example, employers may continue to offer health coverage to workers. The New York Times suggested that if anything, employers will switch retirees to the exchanges.