As Health Reform Starts, 30 Percent of Firms to Cut Coverage

By Jon E. Dougherty at 6 Jun 2011

(Newsroom America) -- At least 30 percent of companies surveyed said they will cease to offer employer-supplied health insurance once President Barack Obama's signature healthcare law takes effect.

According to the study published in McKinsey Quarterly, only about 7 percent of employees will be forced to switch to subsidized-exchange programs, but nearly one-third of employers said they "definitely or probably" will stop offering coverage.

The survey of 1,300 employers said those firms that are aware of the so-called "Obamacare" measure are more likely to consider alternatives to employer-offered plans, according to MarketWatch.com.

"At least 30 percent of employers would gain economically from dropping coverage, even if they completely compensated employees for the change through other benefit offerings or higher salaries," the report said.

"Contrary to what employers assume, more than 85 percent of employees would remain at their jobs even if their employers stopped offering [employer-sponsored insurance], although about 60 percent would expect increased compensation," it added.

The study said a number of health competitors will emerge in the market once the law's provisions begin to take effect in earnest.

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