HR News Roundup: Labor Hates Healthcare Reform
Large Employers Unlikely to Drop Health Benefits
With stories coming out nearly weekly about major employers dropping spouse coverage or medical coverage for retirees (most recently GE, IBM, UPS, Delta Airlines), it's no surprise that American workers are increasingly concerned about their benefits eroding . What they don't know is that most large employers aren't likely to make dramatic shifts right away.
An article in Health Affairs last week explored the likelihood that employers will drop health insurance coverage.
"Rates of employer-sponsored coverage are driven by the business case for benefits for the firm's workers," write the authors. The business case for offering health benefits include:
- Employer-based plans are already subsidized since they are not subject to federal, state income taxes or the Social Security payroll tax.
- Employees already pay for health insurance through lower wages, and employers prefer to keep total compensation constant.
- Employer-based health plans typically reflect the preferences of the employees, and tailoring health plan preference for each worker adds up a large administrative cost.
Although it will be 2015 before we can determine the real effects of the employer mandate, the authors of the report concluded that reports by the Congressional Budget Office, the RAND Corp., the Urban Institute, and the Centers for Medicare & Medicaid Services are correct in determining there will be "relatively small declines" in employer-based coverage as a result of the PPACA.
Chelsea Rice is an associate editor for HealthLeaders Media.
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