Companies may weigh dropping health plans

WASHINGTON — The new health-care law wasn't supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations.
But last week a leading manufacturer told workers that their costs will jump, partly because of the law. And Tennessee Gov. Phil Bredesen laid out a scenario in which employers could get out of health care by shifting workers into taxpayer-subsidized insurance markets that open in 2014.

While it's too early to proclaim the demise of job-based coverage, corporate number crunchers are looking at options that could lead to major changes.

"The economics of dropping existing coverage is about to become very attractive to many employers, both public and private," Bredesen said.

That's just not going to happen, White House officials say. "The absolute certainty about the Affordable Care Act is that for many, many employers who cover millions of people, it increases the incentives for them to offer coverage," said Jason Furman, an economic adviser to President Barack Obama.

Yet at least one major employer has shifted a greater share of plan costs to workers, and others are weighing the pros and cons of eventually forcing employees to strike out on their own.

"I don't think you are going to hear anybody publicly say 'We've made a decision to drop insurance,'" said Paul Keckley, executive director of the Deloitte Center for Health Solutions. "What we are hearing in our meetings is, 'We don't want to be the first one to drop benefits, but we would be the fast second.' We are hearing that a lot." Deloitte is a major accounting and consulting firm.

"My conclusion on all of this is that it is a huge roll of the dice," said James Klein, president of the American Benefits Council, which represents big company benefits administrators. "It could work out well and build on the employer-based system, or it could begin to dismantle the employer-based system."

Impact may increase

Employer health benefits have been a middle-class mainstay since World War II, when companies were encouraged to offer health insurance instead of pay raises. About 150 million workers and family members are now covered.

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