Employers Less Likely To Drop Coverage Than You Might Think

By Scott Hensley

Published May 30, 2012 at 2:52 PM CDT

Employers are bruised by health costs, but most aren't thinking about dropping coverage just yet.

When it comes to businesses providing health coverage for employees, there's a mad dash for the exits, right?

Maybe not, according to a recent survey of more than 1,300 U.S. employers of varying sizes. Consultants at Oliver Wyman's health practice wondered how employers are weighing the increasing costs of providing health insurance and the potential exit strategy paths available under the federal health law (if it survives the Supreme Court).

Bottom line: only 8 percent of the employers surveyed have plans to drop coverage altogether. But half of the companies surveyed do plan to make big changes to the coverage they offer.

"The most critical points are that they by and large have a very strong desire to take care of their employees," Oliver Wyman's Mindy Kairey tells Shots. Many employers have a strong belief that healthy employees are better employees.

And some employers worry that they'd be less able to attract the workers they want without offering health coverage. Companies that employ more highly paid workers are less likely to be thinking about dropping coverage.

So what's changing? Health costs continue to rise, putting pressure on employers to manage insurance expenses. The folks at Oliver Wyman asked about two relatively new approaches that are starting to get some traction.

One is private insurance exchanges, essentially beefed-up menus of coverage options that feature a wider variety of options than you might already be choosing from each year. In some cases, the employer might give you a fixed amount of money to make the decision about which one to pick. About 60 percent of companies would consider this approach if it save them at least 10 percent on health costs, the survey found.

Another option gets a new buzzword: value-based networks. In this approach, providers of health care get paid based on the quality bang for the buck they provide. About half of employers are interested in this option, if it save them at least 10 percent of costs.

As it is, the erosion of employer-based health coverage is well under way, as NPR reported as part of a series on what it's like to be sick in America. "In plain language, it's becoming skimpier and skimpier and less and less comprehensive," Drew Altman, president and CEO of the Kaiser Family Foundation, told us.