Employers unlikely to drop coverage because of health law, survey finds

Only 2 percent of employers are “very likely” to stop offering coverage in 2014 and drop their workers into the healthcare reform law’s insurance exchanges, according to a new survey of 894 employers by the consulting firm Mercer. Another 6 percent are “likely” to do so, the survey found.

Democrats immediately drew attention to the report, which belies an earlier McKinsey survey that concluded that 30 percent or more of employers could drop their coverage and dump their workers into the federally subsidized exchanges. The conflicting estimates provide ammunition to both parties as they debate how much the law will end up costing and whether it fulfills its promise that people who like their coverage will be able to keep it.

Still, the Mercer report isn’t all good news for healthcare reform proponents.

{mosads}It also found that businesses have already seen a 2 percent increase in enrollment, on average, as the law extended eligibility to dependents under the age of 26. And employers anticipate an extra 2 percent growth in 2014, when they’ll be required to automatically enroll new full-time workers who don’t opt out of coverage.

“Employers have already been facing average increases in per-employee health benefit costs of about 6 percent annually for the past six years,” Mercer consultant Tracy Watts said in a statement accompanying the survey. “Adding enrollment growth on top of that puts a real strain on their budgets.”

Respondents said their No. 1 concern was the law’s excise tax on so-called “Cadillac” insurance plans, starting in 2018. Almost half — 45 percent — of respondents said the tax on high-cost plans was a “very significant” or “significant” concern.

“There are reasons other than richness of benefits that drive up cost, such as having an older population or being located in a high-cost metropolitan area — both factors that are not under an employer’s control,” Watts said. “And employers that rely on generous medical benefits to help attract and retain top employees are also going to be concerned about an excise tax.”