If You’re Concerned About Employers Dropping Coverage, Advocate For The Employer Mandate

A new survey of employers is suggesting that “only 7% of employees will be forced to switch to subsidized-exchange programs,” but “at least 30% of companies say they will ‘definitely or probably’ stop offering employer-sponsored coverage” once a new ACA provision requiring businesses with workers receiving subsidies in the exchanges to pay a fee or offer coverage takes affect in 2014:

The survey of 1,300 employers says those who are keenly aware of the health-reform measure probably are more likely to consider an alternative to employer-sponsored plans, with 50% to 60% in this group expected to make a change. It also found that for some, it makes more sense to switch.

The White House is arguing that this survey is out of step with other projections by the Congressional Budget Office (CBO) the RAND corporation. Those reports suggest that the numbers of employers dropping coverage are much smaller since “firms would need to compensate the workers from whom they remove a current benefit, particularly higher income workers, who would lose the valuable tax advantage of ESI.” Indeed, other business surveys have demonstrated that employers would be reluctant to drop coverage.

But if we’re really interested in preserving employer-based coverage — which I’m not sure makes a lot of sense — then we should be talking about repealing the free-rider requirement that Democrats included in the law to please Sen. Olympia Snowe (R-ME) and replacing it with an employer mandate that would require companies to continue offering health insurance coverage. Experiences in Massachusetts have demonstrated that such an approach would increase employer coverage rates without leading to job loss.