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30% Of Employers May Drop Health Benefits

From an unfazed Reuters:

Many US employers to drop health benefits

CHICAGO, June 7 (Reuters) – At least 30 percent of employers are likely to stop offering health insurance once provisions of the U.S. health care reform law kick in in 2014, according to a study by consultant McKinsey.

McKinsey, which based its projection on a survey of more than 1,300 employers of various sizes and industries and other proprietary research, found that 30 percent of employers will "definitely" or "probably" stop offering coverage in the years after 2014, when new medical insurance exchanges are supposed to be up and running.

"The shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike," according to the study, published in McKinsey Quarterly.

"While the pace and timing are difficult to predict, McKinsey research points to a radical restructuring of employer-sponsored health benefits."

Among employers with a high awareness of the health reform law, the number likely to drop health coverage for workers rises to more than 50 percent, the report predicted.

The numbers compare to a Congressional Budget Office estimate that only about 7 percent of employees currently covered by employer-sponsored plans will have to switch to subsidized-exchange policies in 2014, McKinsey said.

The consultant also found that at least 30 percent of employers would gain economically from dropping coverage even if they compensated employees for the change through other benefit offerings or higher salaries.

Losing employer-sponsored insurance would not prompt workers to leave their jobs, contrary to what many employers assume, McKinsey also predicted. The study found more than 85 percent of employees would remain at their jobs even if their employer stopped offering insurance, although about 60 percent would expect increased compensation.

More good news, huh?

This article was posted by Steve on Tuesday, June 7th, 2011. Comments are currently closed.

5 Responses to “30% Of Employers May Drop Health Benefits”

  1. P. Aaron says:

    Howsabout we Drop Obama to preserve healthcare for all Americans.

  2. BigOil says:

    Intended consequences.

  3. retire05 says:

    I can only speak to the employee health care costs for one company; AT & T. Every employee is given free health insurance, as well as for their dependents. The cost to AT & T is $10,073/yr for the employee only. That cost does not cover the cost for dependents. So depending on the number of dependents, the cost goes up.

    AT & T has always provided the very same health care benefits for their retired employees, with their health care plan becoming secondary insurance after a retiree goes on Medicare. This has saved the retiree a bundle of money because they are not required to buy Medicare Advantage plans or subscibe to Medicare Part D, the drug plan. AT & T has already announced it will probably drop the drug plan for retirees in January, 2012, which will cost those retirees millions.

    It is not unreasonable to suggest that AT & T provides thousands of employees well over $30,000/yr in paid health care premiums. If they drop those benefits, they will save BILLIONS annually, because they are not going to give an employee a $30K year increase in salary. Cutting $30k worth of benefits for 100K employees would save AT & T $3 billion/yr and the company would still be the winner even if they gave each employee $500 a month to purchase other insurance.

    If Obamacare is not repealed, look for health insurance benefits to become a big negotiating factor as more and more unions, like the CWA, are negotiating new contracts with companies like AT & T. And with a job market that is in the toilet, the major companies will tell the unions, take it or leave it, there are thousands who would like to have your job.

  4. GetBackJack says:

    “30% Of Employers May Drop Health Benefits”

    Oh, wait …it’s even more harrowing than that fact sounds.

    How many here have heard of WORKFLOW MANAGEMENT SOFTWARE?I

    WMS is a cruel and diabolical CYA for employers. It is software that “manages” employee … whoops, worker …. hours. For those of you who aren’t familiar with how many companies now employ people, hourly wage workers are managed by WMS. Not department managers or other formerly human-created work schedules. The computer does it, based on algorithms that analyze when workers are needed, when work flow requires human energy and when the business needs human interaction. It is a total and masterfully deranged psychotic cluster-goat-fark.

    Where people formerly could count 30 – 40 hours as full-time employees, that’s gone. Dead gone. Your old schedule of knowing when you’d work and and what days, how many days a week are gone. Dead gone.

    One week you’ll work

    Mon 06:15 – 12:30
    Tue 4PM – 10:30
    Wed 12N – 7:20pm
    Thu off
    Fri 08:00 – 1:45
    Sat off


    Sun off
    Mon off
    Tues off
    Wed 08:00 – 10PM
    Thu off
    Fri 06:20 – 12N
    Sat off
    Sun 12N – 7:45pm

    When WMS tales over worker’s schedules you’ll never again be able to plan ahead. You’ll never know your days off, you’ll never know which days you’re working, you’ll never know what hours you’re working until the next week’s schedule is posted because …. the software is constantly being updated and analyzed and self-correcting for minimum worker compensation outflow with maximum worker coverage.

    Sounds cool, but it’s an effing nightmare.

    You’ll never again be able to (a) schedule babysitters or daycare; (b) schedule doctor’s appointments ahead of time, and ALL doctor’s appointments have to be ahead of time; (c) you’ll ever be able to plan ahead for normal life functions like the day you and your significant other have off together; and (d) chances are well over 90% that you … will …. become ….. the …. new ….. permanent part time work force.

    But wait, it gets even worse …ObamaCare regulations that have the force of Law REQUIRE the employer to carry on their insurance plan anyone who is employed more than 20 hours a week.

    Can you guess how many full time people in America are going to be redefined as permanent part-time to avoid carrying them on the company insurance plan?

    If you guessed A LOT step forward and claim your cookie.

    But wait, if possible, the consequences are even more cruel than all this!

    No more 40 hours. No more 30 hours. Now a great swath of American ‘workers’ will be sentenced to 20 hours a week. Here’s the Pro-Tip … THEY CAN’T LIVE ON 20 HOURS OF COMPENSATION A WEEK!!

    They’ll have to find a second, maybe even a third job.

    And here’s the Democratic Party’s most vile and treacherous stab in the heart …..

    Where WMS is deployed, you WON’T BE ABLE TO HAVE A SECOND JOB. Because you’ll never know what part of what day you can be available to be employed by the secondary employer!

    Totally and completely and utterly EFFED.

    And the consequences in social spending , broken homes, divorces, abandoned children, you name it …. will explode exponentially.

    Thank You Criminal Party of America.

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