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INDIANAPOLIS (AP) — Nearly one of every 10 midsized or big
employers expects to stop offering health coverage to workers once
federal insurance exchanges start in 2014, according to a new
survey from a large benefits consultant.
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Towers Watson also found in a survey completed last month that an
additional 20 percent of the companies are unsure about what they
will do.
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Another big benefits consultant, Mercer, found in a June survey of
large and smaller employers that 8 percent are either “likely” or
“very likely” to end health benefits once the exchanges
start.
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Employer-sponsored health insurance has long been the backbone of
the nation’s health insurance system. But the studies suggest that
some employers, especially retailers or those offering low wages,
feel they will be better off paying fines and taxes than continuing
to provide benefits that eat up a growing portion of their budget
every year.
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The exchanges, which were devised under the health care overhaul,
may offer an alternative for their workers. These exchanges aim to
provide a marketplace for people to buy insurance that can be
subsidized by the government based on income levels.
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A large majority of employers in both studies said they expect to
continue offering benefits once the exchanges start. But former
insurance executive Bob Laszewski said he was surprised that as
many as 8 or 9 percent of companies already expect to drop coverage
a couple of years before the exchanges start.
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Such a move comes with potential payroll-tax headaches and could
subject firms to fines. It also would give their employees a steep
compensation cut if companies don’t raise pay in exchange for
ending coverage.
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“Dropping coverage is going to be very difficult for these
(companies) to do,” said Laszewski, a consultant who was not
involved with the studies.
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Towers Watson’s Randall Abbott said the survey results should be
seen as a snapshot of how companies are thinking now. They can’t be
viewed as a final decision because there are still many unresolved
variables. No one knows what the exchanges will be like or whether
consumers will accept them, and companies may change their thinking
once they learn more about the overhaul.
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The health care overhaul also faces court challenges, and President
Obama is up for re-election next year, two more variables that
could shape what happens in 2014.
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