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DeParle: Employers Will Still Offer Coverage in 2014

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A White House health insurance advisor says reports that the Affordable Care Act will kill off group health plans are greatly exaggerated.

Nancy-Ann DeParle, an assistant to President Obama who focuses on health care policy, writes in a White House blog entry about a recent prediction by consultants at McKinsey & Company, New York, that as many as 30% employers may drop their group health coverage in 2014, when the Patient Protection and Affordable Care Act of 2010 (PPACA) is supposed to create a system of health insurance exchanges that individuals can use to buy health coverage on a guaranteed issue, mostly community-rated basis.

PPACA will require large employers that fail to offer health coverage to pay a penalty, but, for many employers, the cost of the penalty would be much less than the cost of group health coverage, some PPACA watchers say.

Other consultants, at organizations such as the RAND Corp., Santa Monica, and the Urban Institute, Washington, argue that PPACA may increase group coverage costs in some ways, but reduce costs in other ways, by, for example, reducing employers’ share of the cost of caring for the uninsured.