One in 10 Employers in U.S. Say They Will Cut Health Coverage

A new study finds about one in 10 U.S. employers say they plan to cut health coverage for workers over the next several years, as the bulk of health care reform regulations are implemented.

The results of the study, conducted by the consulting company Deloitte, are less drastic than those of a study conducted last year by the consulting company McKinsey, which found 30 percent of employers would “definitely or probably” stop offering health insurance after 2014.

The Wall Street Journal notes the majority of Americans under age 65 who have health insurance receive it through an employer. Currently, most employers who offer health care coverage say they do so because it helps them recruit and keep employees.

The Deloitte study found about one-third of companies said they might decide to stop offering health coverage under several scenarios: if they find health care reform requires them to provide more generous benefits than they do currently; if a scheduled tax on high-cost plans takes effect; or if they decide the cost of penalties for not offering insurance is less expensive than paying for benefits.

Companies with 50 or more employees that do not provide health benefits after 2014 face penalties that start at $2,000 for each worker. The cost for providing health insurance far exceeds that amount for most companies, the article notes. However, companies that provide health insurance get tax breaks, and often can offer lower wages.

The survey found fewer than 2 percent of companies with more than 1,000 workers said they would consider dropping coverage, compared with 13 percent of those with 50 to 100 workers.