Analysts at the Urban Institute contend that most employers will keep their group coverage if they think workers will be better off in the employer-sponsored plans than shopping for coverage through the new exchange system.
If the Patient Protection and Affordable Care Act of 2010 (PPACA) takes effect as written and works as drafters expect, it will require large employers that fail to offer a minimum level of group coverage to pay a penalty for each employee who goes on to buy individual coverage using a new federal tax credit subsidy program.
Linda Blumberg and colleagues at the Washington-based institute argue against the idea that many large employers will choose to pay the penalties rather than offer coverage.
“An employer who drops coverage won’t save money overall,” the analysts write. “Employers who drop workers’ coverage, but fail to increase employees’ wages in order to maintain their overall compensation, will inevitably lose these employees to competitors. Thus, employers who drop coverage must in turn, increase wages.”
The pressure to keep group coverage will be especially strong when employers are thinking about what they need to do to keep valuable, better-paid workers, the analysts say.
Antidiscrimination rules and other rules and traditions likely will keep employers from finding ways to keep higher-paid workers in the group plans while letting the lower-paid workers go to the exchanges, the analysts say.
My own take: Er …. There are employers that actually want employees and don’t view keeping them as a nostalgia-tinged obligation? Uh, sure.