White House Pushes Back Against McKinsey Health Care Report

Jun 8, 2011 5:46pm

ABC News’ Huma Khan reports: The White House is pushing back against a report by consulting firm McKinsey & Company that states 30 percent of employers will “definitely or probably” stop offering health insurance coverage to employees after 2014.

The Obama administration argues that the report is an outlier, and cites studies by the Rand Corporation, The Urban Institute and Mercer that found that businesses would not change their insurance programs substantially as a result of the Affordable Care Act.

“Economists agree that employers offer health insurance to help attract and retain the most talented employees,” White House Deputy Chief of Staff Nancy-Ann DeParle wrote in a blog. “Employers will continue to seek out top talent: and the new law makes it easier for them to do so by tackling health costs and supporting small businesses. Additionally, dropping coverage is unlikely to save money for employers.”

McKinsey surveyed 1,300 employees. The report also found that 50 percent of companies that were highly aware of the provisions in the new law were likely to drop coverage.

Starting in 2014, businesses with more than 50 workers have to pay a $2,000 penalty per employee if they do not provide health coverage to their employees, but the report found that many firms would actually benefit by dropping coverage despite those fees.

The non-partisan Congressional Budget Office estimates that about three million fewer people would get coverage through their employer by 2019, as a result of the new law.

Between six and seven million people would be covered by an employment-based plan who would not be  covered by one under current law, but one to two million people who would be covered by their employers currently would instead go to the exchanges for coverage.

CBO also estimated that the new health care law would reduce the number of uninsured to 23 million by 2019, and the share of non-elderly Americans who are insured would rise to about 94 percent from 83 percent currently. About 24 million people would purchase their own insurance, according to the CBO. 

The McKinsey report comes the day that a legal battle is brewing in Atlanta over the constitutionality of Affordable Care Act. In January, a Florida judge ruled on the side of 26 states who charge that the individual mandate – which requires that all Americans have health insurance by 2014 – is unconstitutional. Today, a federal judge in Georgia heard arguments from both sides and the case is likely to end up in the Supreme Court within the year, experts say.

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