Survey: 1 in 10 employers expects to drop health coverage

The StateAugust 25, 2011 

Nearly one of every 10 midsized or big employers expects to stop offering health coverage to workers once federal insurance exchanges start operating in 2014, according to a new survey from a large benefits consultant.

That could drive the out-of-pocket cost of health care up by thousands of dollars a year for the average American, industry experts say.

In a survey completed last month, Towers Watson also found that an additional 20 percent of companies are unsure about what they will do.

Employer-sponsored health insurance long has been the backbone of the nation’s health insurance system. But the studies suggest some employers, especially retailers or those paying low wages, think they will be better off paying fines and taxes than continuing to provide health care benefits, which eat up a growing portion of their budget every year.

Several of the Midlands’ largest employers – SCANA, BlueCross and BlueShield of South Carolina, and Lexington Medical Center – said Wednesday that they have not had discussions about dropping health care coverage for employees.

The federal insurance exchanges, which were devised under the health care overhaul, may offer an alternative for workers who lose their insurance from their employer. These exchanges aim to provide a marketplace for people to buy insurance that can be subsidized by the government, based on income levels.

The whole point of these surveys is to drive home the fact that the old model (of workers getting health insurance through their employer) is breaking down,” said Mark Tompkins, a professor of health policy in the University of South Carolina’s political science department. “The question is: What are we going to replace it with?”

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