Is the End of Employer Provided Health Insurance Around the Corner?

Frequent readers are familiar with the fact that many analysts believe health-care reform will drive businesses to drop medical benefits for their employees.  The argument is that it will be a better financial deal for staff to acquire insurance on the Marketplace than for the employer to continue to pay for coverage.

This is because ACA subsidizes the individual for the cost of health insurance but most businesses do not receive any type of assistance.  It’s true that some employers get the benefit of the Small Business Health Care Tax Credit.  But because of the particular rules associated with the credit, others won’t see the value.

A recent article by Kaiser Health News profiles the changing dynamics of the health-care landscape.  It describes the circumstances of a small Atlanta-based restaurant chain that moved its managers to the Marketplace from employer-based coverage. The economics of ACA meant that it was much more expensive to leave them on the open market instead of allowing the government to subsidize the cost.

From the article:

“I had a lot of regrets going into it,” Dunn, who owns three Italian Oven restaurants in suburban Atlanta, said of his decision. “I don’t think I have as many now — only because I’ve seen the affordability factor for my managers improve.”

With subsidies factored in along with unrelated pay increases, the managers “are going to be saving money out of the deal” while getting coverage comparable to what they had before, Dunn said. “My managers actually got excited about it because they’re saving money on their health Book-Best-of-2014insurance.

The question remains how quickly, and how broadly, this change will take place. I highly recommend reading the best selling book, “The End of Employer-Provided Health Insurance.” by Paul Zane Plizer & Rick Lindquist

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