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Health Care Law Forcing Costs to Rise & Employees to Lose Coverage, Reports Confirm

June 08, 2011

A report released this week by the McKinsey Group, consistent with two other recent independent studies, reinforces the reality that too many employers, employees and their families are already facing – health care costs continue to increase because of the new health care law.  This despite repeated promises from President Obama that his current health care overhaul would ensure that those who like their current health care coverage could keep it and that the law would reduce costs by $2,500 for the average American family.  According to the latest report these cost increases are forcing many employers to reevaluate whether they can afford to maintain their health insurance plans.
The McKinsey
report suggests that as employers see the negative effects the Democrats’ health care law will have on employer-sponsored health insurance (ESI), employers will be forced to make seismic changes to their current practices.  Key findings from the report indicate:

  • Overall, 30 percent of employers say they will definitely or probably stop offering health care coverage in the years after 2014.
  • As awareness of the Democrats’ health care law increases, so too does the likelihood of action.  Among employers with a high awareness of the law, those saying they will stop offering coverage increases to more than 50 percent.

A recent Millman report examines the total cost of health care for a family of four covered by a common form of coverage, a Preferred Provider Plan (PPO), and health care costs paid by both the employer and the employee. Key findings of the Millman report indicate:

  • A $1,319 increase in the total cost of health care coverage for a family of four compared to 2010 – a 7.3% rise in health expenses. 
  • The new rules and regulations resulting from the Democrats’ health care law are aggravating existing challenges employers face in a sluggish economy noting, “employers will need to strike a careful balance between passing on more costs to employees versus potentially paying penalties based on affordability provisions in the Patient Protection and Affordable Care Act (PPACA).”

A report by Price Waterhouse Coopers (PWC) on medical cost trends for 2012 provides a dismal forecast of continued increases that consumers will see in their health care costs.
Key findings of the PWC report indicate:

  • The Democrats’ health care law has done little to ease the compliance burdens facing employers – as the PWC report points out, “employers have had their hands full complying with the avalanche of new regulations under PPACA.”
  • Medical costs are expected to increase:  PWC expects medical costs to increase 8.5% in 2012, up from 8% in 2011.  
  • More Americans will NOT be able to keep the health care coverage they have and like, with the report noting that “some employers are becoming less confident in their ability to offer health benefits on a long term basis.”

Of note:

    • 84% of employers are likely to makes changes to offset the costs associated with the Democrats’ health care law,
    • 86% are likely to re-evaluate their overall benefits strategy, and
    • 50% are considering significantly changing or eliminating company subsidies for dependent medical coverage.

Three reports in three weeks by highly respected independent experts —each one reaching the same conclusion:  the Democrats’ health care law has made health care coverage more expensive and threatens to destroy the ability to “keep the coverage you have and like.”