www.thedaily.com     Tom Murphy       August 25, 2011 

Nearly 10% of employers to let feds carry health-care burden

Almost one of every 10 midsized or big employers expects to stop offering health coverage to workers once federal insurance exchanges start in 2014, according to a new survey from a large benefits consultant.Towers Watson also found in a survey completed last month that an additional 20 percent of the companies are unsure about what they will do. 

Another big benefits consultant, Mercer, found in a June survey of large and smaller employers that 8 percent are either “likely” or “very likely” to end health benefits once the exchanges start. 

Employer-sponsored health insurance long has been the backbone of the nation’s health insurance system. But the studies suggest that some employers, especially retailers or those offering low wages, feel they will be better off paying fines and taxes than continuing to provide benefits that eat up a growing portion of their budget every year. 

The exchanges, which were devised under the health care overhaul, may offer an alternative for their workers. These exchanges aim to provide a marketplace for people to buy insurance that can be subsidized by the government based on income levels. 

A large majority of employers in both studies said they expect to continue offering benefits once the exchanges start. But former insurance executive Bob Laszewski said he was surprised that as much as 8 or 9 percent of companies already expect to drop coverage a couple of years before the exchanges start. 

Such a move comes with potential payroll-tax headaches and could subject firms to fines. It also would give their employees a steep compensation cut if companies don’t raise pay in exchange for ending coverage. 

“Dropping coverage is going to be very difficult for these [companies] to do,” said Laszewski, a consultant not involved with the studies. 

In other findings, the study said more than half the employers would consider next year rewarding or penalizing employees based on certain measurements of health, such as cholesterol and blood pressure levels, versus 8 percent this year that considered such plans. Going forward, more than four in 10 employers said they use or are planning to use social media to “impact” employee health and well-being, versus 9 percent today. 

The health care overhaul could also be affected by court challenges. 

— Associated Press

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