Health Insurance

GOP: Healthcare law ‘encourages’ business to cut back benefits

President Obama’s healthcare law gives the country’s biggest businesses a strong incentive to quit offering healthcare benefits, House Republicans said Tuesday.

Republicans on the Ways and Means Committee said employers would save billions of dollars if they quit offering health coverage to their employees and instead pushed workers into newly created insurance exchanges.

Ways and Means staff analyzed healthcare costs at 71 of the Fortune 100 companies. Those firms would save a collective $28.6 billion in 2014 by dropping their health coverage, according to the committee’s report. Over the next decade, they’d save about $6 billion each. Such a move would affect more than 10 million employees and dependents.

{mosads}The healthcare law requires large employers to pay a $2,000 fine for each employee who buys insurance on his or her own. Paying the fine will often be cheaper than providing healthcare benefits.

“Anyone who gets insurance through their job should be worried about what will happen next, because there is a distinct financial incentive for employers to terminate healthcare coverage under the Democrats’ healthcare law,” Ways and Means Committee Chairman Dave Camp (R-Mich.) said in a statement.

Employer-based insurance is by far the dominant source of health benefits in the United States. Businesses offer health benefits as a way to attract qualified workers — not providing coverage has always been cheaper than providing coverage.

As the Ways and Means report notes, the Congressional Budget Office has said it does not expect an exodus from employer-based insurance.

“If firms could have attracted employees more cheaply by dropping health benefits and adding wages or other benefits that cost less, then they would have done so,” CBO said last year.

But Republicans argue that the health law’s new mandates will raise the cost of healthcare and prompt employers to reconsider their benefits.

The law’s employer mandate applies to businesses with more than 50 employees, which Republicans say will force many businesses to begin offering coverage for the first time.

The health law also eliminates so-called “mini-med” plans — inexpensive policies with strict annual limits, which are common in the service industry. It requires plans to provide specific benefits, sometimes without charging a co-pay or deductible.

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