Families USA Debunks Misleading Health Care Study

Posted in:

Opponents of the Affordable Care Act are latching onto a new "study" from the firm McKinsey and Co. implying that the health reform law will prompt as many as half of all U.S. employers to drop employee health coverage, pay a penalty and dump their workers into new health insurance exchanges.

The law requires that state-based health insurance exchanges be up and running by 2014. The exchange is a marketplace where individuals and small businesses can review and choose from a variety of health plans from different insurance providers. Individuals who do not receive insurance through an employer can purchase health coverage on the exchange with the help of public subsidies based on income.

So should we be worried by the McKinsey study? Will employers start eliminating employee health benefits come 2014? In a word, no. As Ron Pollack of Families USA explains in a recent blog post:

This is pretty powerful stuff. Except of course for one teeny, tiny, little detail: It's not true.

Don't believe me? Take a look at the statement McKinsey released when pressed to share their methodology:

The survey was not intended as a predictive economic analysis of the impact of the Affordable Care Act. Rather, it captured the attitudes of employers and provided an understanding of the factors that could influence decision making related to employee health benefits.

The study – according to McKinsey's own belated statement – actually tells us nothing about how the Affordable Care Act will affect employer behavior.

But worse than that, the survey failed to even fairly measure the factors that might influence employer behavior. The survey first "educated" the respondents about the Affordable Care Act, then asked questions. Obviously, if the "education" is incomplete and biased, the survey results are unreliable. Just as one example, the survey failed to point the following out to respondents: if employers drop coverage, employees will be unhappy because they will lose an important tax break (the value of employer-based insurance is not taxed).

So what's actually true?

Late last week, Avalere Health released an analysis citing research from the Congressional Budget Office (CBO), the Lewin Group, RAND, and the Urban Institute that shows most employers won't, in fact, suspend health benefits to employees. They provide a few main reasons:

  1. Employers offer health benefits to recruit and retain employees. The presence of exchanges does not change this motivation.
  2. Employers offer health benefits to boost worker productivity.
  3. There are many intangible reasons why employers offer coverage to employees, such as the value employees assign to the benefit, and the feeling amongst some employers that offering health benefits is the "right thing to do."


0 comments posted

Post new comment

Comment Policy:

Thank you for joining the conversation. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the Keystone Research Center or Pennsylvania Budget and Policy Center and do not constitute official endorsement by either organization. Please note that comments will be approved during the Keystone Research Center's business hours.

If you have questions, please contact [email protected]

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <p> <img>
  • Lines and paragraphs break automatically.
Refresh Type the characters you see in this picture. Type the characters you see in the picture; if you can't read them, submit the form and a new image will be generated. Not case sensitive.  Switch to audio verification.