When the McKinsey study was released recently and stated that 30% of employers surveyed said that they would “definitely” or “probably” stop offering employer-sponsored health insurance in 2014, it created quite a stir. The CBO had predicted that about 7% of employers would stop offering health insurance once the exchanges were up and running, so the 30% likely came as a surprise to a lot of people. McKinsey & Company are standing by their data and methodology, although some US lawmakers are still skeptical.
When you look through the text of the survey, it appears to be a very thorough look at current employer opinions. Of course, a lot could change between now and 2014. But most of the survey does appear to be pretty objective, detailed, and unbiased. There are a few minor exceptions, and a couple of glaring ones however – and those might account for the high percentage of employers who said they would stop offering health insurance to their employees in 2014.
Question 17 asks “Over the past 3 years, approximately how much have your total medical expenses increased each year?” There are several answers to choose from (mostly percentage ranges), including an option to select if your medical expenses have declined. But in order to be impartial, the question would have been better worded if it had asked how much total medical expenses had changed, rather than increased. Even though “decreased” was one of the answer options, using the word “increased” in the question gets employers into the mindset of focusing on the increasing cost of health care. Even though we all know that for most employers, health care costs have indeed increased over the last three years, asking the question in this manner could add some bias to the survey.
But when we get to questions 40 and 41, there’s some much more biased language, and these are the survey questions that specifically deal with whether or not employers are likely to cancel their group health insurance in 2014. The questions start by explaining the small business and individual health insurance exchanges, and then instruct respondents to “assume exchanges become an easy, affordable way for individuals to obtain health insurance.” Then they ask whether or not the employers would be likely to stop offering group health insurance. I think it’s reasonable to conclude that more employers will say they plan to get rid of their group policy when they have just been told to assume that exchanges will make individual health insurance easy to obtain and affordable.
We don’t know yet how the exchanges will work. Colorado was one of the first states to take legislative action to start setting up an exchange, and even here the process is still in its infancy. It seems a bit premature to say that we can assume that the exchanges will make health insurance “easy and affordable” although hopefully the system will be user-friendly and keep costs as low as possible.
In addition, the next part of question 41 asks respondents whether they have previously calculated how many of their employees would benefit economically if the employer stopped offering health insurance. This question seems reasonable, if it were followed up with one asking the opposite question: how many employees would be adversely impacted economically if the company stopped offering health insurance? The survey does go on to indirectly address this question by asking whether the employer would offer alternative compensation to employees who end up paying more for their health insurance through the exchanges than they were paying for group coverage. But I think that without a question asking specifically whether the employer has calculated how many employees would be adversely impacted, the question about how many employees would benefit economically is a bit leading and biased.
Overall, the survey is very thorough, the questions are mostly objective, and the data obtained from 1300 employers is no doubt a useful barometer of current employer attitudes towards health care reform. But I imagine that if the sentence about assuming that exchanges will make individual health insurance easy and affordable had not been included, the number of employers who said that they plan to drop their group plans might not have been so high. Time will tell.