White House: Companies Won’t Drop Health Coverage

There was a lot of talk this week about a new survey from Towers Watson, a corporate human resources research company, that suggested more and more workers are going to find themselves without company-sponsored health insurance even after the new health law takes effect beginning in 2014.

However, White House officials told FOX Business that this one survey is not an indication of what companies may do with their health benefits, because other studies of the effects of health reform have shown the opposite.

“This is just a survey and surveys are notoriously unreliable for predicting these kinds of things,” a White House official tells FOX Business, adding, “There have been a number of surveys and studies on this question – some more rigorous than others. But data and experience show that employer-sponsored insurance is likely to stay about even or increase thanks to reform.”

The new Towers Watson survey of 368 mid- to large-sized companies appeared to suggest that the burden will shift to the government if more companies decide the extra cost from health reform isn’t worth the trouble, and start dropping coverage. These moves could put more people into new health benefits exchanges that each state is supposed to launch according to the new reform bill.

The Towers Watson survey engendered much debate, because the health care law was supposed to ensure that all Americans, including the estimated 32 million uninsured, received coverage, and what will happen if the law survives an expected Supreme Court challenge.

Health & Human Services assistant secretary for public affairs, Richard Sorian also tells FOX Business, wait a second.

“These findings are at odds with rigorous studies conducted by the Congressional Budget Office, the Rand Corporation and the Urban Institute. History has shown that because of reform, the percent of businesses offering insurance increased,” Mr. Sorian said in a statement provided to FOX Business. “Massachusetts uses a similar structure and the number of employers offering insurance increased following enactment.”

In its survey of 368 mid- to large-size employers who are considering strategy changes in 2014 and 2015 due to health reform, Towers Watson found:

*29% of companies surveyed are unsure about whether they will continue sponsorship of health benefits or offset the loss of health care benefits (if companies exit) with an equivalent salary increase in 2014;

*47% said they may substantially reduce the health care benefit value of active employees;

*57% are considering reducing employee health care contributions for lower-paid workers.

And Towers Watson found that 70% of employers are skeptical that health insurance exchanges will provide a viable alternative to employer-sponsored coverage for active employees in 2014 or 2015.

But the White House official says: “Other studies from reputable organizations have reached entirely different conclusions. Here are just two examples.” He cites:

*“The Rand Corporation: The percentage of employees offered insurance will not change substantially, but a small number of employees in small firms (defined as those with under 100 employees in 2016) will obtain employer-sponsored insurance through the state insurance exchanges.”

*“The Urban Institute: Some have argued that the Patient Protection and Affordable Care Act would erode employer-sponsored insurance (ESI) by providing incentives for employers to stop offering coverage. Others have claimed that most businesses would face increased costs as a result of reform. A new study finds that overall ESI coverage under the ACA [health reform act] would not differ significantly from what coverage would be without reform.”

The White House official adds: “Why are these studies more interesting and credible? Rather than just surveying employers, these kinds of studies use some sophisticated modeling techniques that are proven to be much better at predicting employer behavior. The Congressional Budget Office used similar modeling and came to a similar conclusion as the Rand Corporation and the Urban Institute.”

And he adds: “It’s also instructive to look at what happened in Massachusetts after they passed their reforms — the percent of companies offering insurance to their employees went up.”

The Administration official continued: “Maybe most importantly – people want to offer insurance to their workers because it helps them get the best talent and the new law will make it easier for them to do so by driving down costs.”

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