Toomey And The GOP Hypocrisy On Employers Dropping Health Coverage

At a Monday meeting with the Bucks County Courier Times editorial board, Sen. Pat Toomey (R-PA) claimed that many companies were dropping their health insurance coverage as a result of the Affordable Care Act and promised to provide a detailed list of employers contemplating the change. “I think there have been actual drops,” Toomey said, when pressed on how companies have reacted to the law.

But Toomey is now conceding that he is unable to provide such a list, claiming that he “misspoke” last week when he claimed that the law is forcing “many” businesses to eliminate coverage:

When asked again for the government list Toomey referenced to the editorial board, [Toomey spokesperson] Soloveichik said it appeared no such list exists. “This is partly because the law is not fully in effect yet and a lot of the consequences remain to be seen,” she said in an e-mail.

Early Wednesday evening, Toomey contacted the Courier Times to say he “misspoke” when he said that such a list existed.

Toomey added that “quite a number” of organizations had requested waivers from the law, “but not a whole lot have dropped coverage,” though he added that he expects it will happen.

Toomey’s logic is hard to follow: he’s warning of a mass erosion in employer insurance, while condemning a mechanism that is designed to prevent companies from dropping coverage.

Some businesses have claimed they would drop coverage if forced to comply with the new regulations that prohibit employers from placing lifetime and annual caps on coverage (among other provisions), even though the number is difficult to quantify. In fact, the Affordable Care Act seeks to mitigate potential coverage drops by granting temporary waivers that would provide employers (insurers and states) with additional time to comply with the law. But Toomey opposes such flexibility, even though the overwhelming majority of employers are indicating that they’re willing to comply with the law by 2014.

As Bucks County Courier Times’ Jo Ciavaglia points out, “Mercer LLC’s November survey of 2,800 U.S. employers found that 20 percent of employers with between 10 and 499 workers stated that they’d likely drop coverage in 2014.” Just 6 percent of businesses “with at least 500 employees and 3 percent with at least 10,000 employees stated they’re likely to drop their plans once key provisions of the law take effect in 2014.” Similarly, “Crain Communications’ online survey of nearly 3,700 business executives in April found that 52.5 percent ‘strongly disagreed’ that it would be better for their companies to stop offering health care benefits and pay a fine under the new law.”

Mercer’s Tracy Watts explained, “Employers are reluctant to lose control over a key employee benefit.” “But once you consider the penalty, the loss of tax savings and grossing up employee income so they can purchase comparable coverage through an exchange, dropping coverage may not equate to savings.”

Indeed, a June 2010 study of how the far more rigid Massachusetts employer mandated affected coverage in the state found that “enrollment in employer plans in Massachusetts grew during the four years many of the reforms on which the federal law is based have been in place.”