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1 in 10 businesses have health insurance on the chopping block

By Maryalene LaPonsie on July 30th, 2012

Although most workers will continue to have employer-sponsored medical insurance after the main provisions of the Patient Protection and Affordable Care Act take effect, not all will be so lucky, according to a new study. Health insurance benefits are on the chopping block for 3 percent of employees.

The 2012 Deloitte Survey of U.S. Employers found that almost 10 percent of businesses, representing 3 percent of the domestic workforce, are planning to eliminate health insurance coverage in the next three years. Another 10 percent say they aren't sure what will happen to their worker health benefits once the health care reform law is fully implemented.

Employers cite costs as a concern

Of the employers surveyed, many cited concerns with rising costs as the reason for potentially dropping health insurance coverage. The following are the most commonly indicated factors that may lead an employer to eliminate health benefits:

  • Minimum benefits package required by the government is more generous than that currently offered by the employer: 34 percent
  • High-premium plans, commonly called "Cadillac plans," will be taxed: 34 percent
  • Penalty for not offering benefits is less than the cost of medical insurance premiums: 33 percent
  • Premium costs continue to rise faster than the rate of inflation: 32 percent
  • Health insurance exchanges represent a better option for employees: 29 percent

The likelihood of dropping health insurance coverage varies by employer size and industry. Businesses with 50 to 100 employees were most likely to say they will end their employee health insurance coverage. At 22 percent and 17 percent respectively, retail and manufacturing are the industries with the greatest percentage of firms saying they plan to end health benefits.

Health insurance plans still vital to worker retention

While some employers are planning to cut benefits, most see health insurance coverage as a vital component to attracting and retaining good workers. The Deloitte survey found most employers felt offering medical insurance was important for the following reasons:

  • Retain good employees: 87 percent
  • Attract the most desired/effective employees: 83 percent
  • Improve employee morale: 80 percent
  • Improve employee health, reduce absenteeism and improve productively: 67 percent

An estimated 160 million Americans receive medical insurance through their employers. The Deloitte study indicates that it will be business as usual for most of those workers, even after health care reform is fully implemented.

Maryalene LaPonsie
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.

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