Huge Number of Businesses to Drop Health Insurance, Thanks to Obamacare

Kathryn Nix / June 08, 2011

Experts have warned that Obamacare’s new subsidy program could cause a mass exodus of businesses out of employer-sponsored insurance. New research from McKinsey and Company based on a survey of employers reinforces this concern.

According to their findings, 30 percent of employers said they would definitely or probably stop offering insurance once the law’s main provisions go into effect in 2014. The inclination to dump coverage exceeded 50 percent once employers’ understanding of the law’s effects increased.

Obamacare encourages employers to dump coverage on two fronts. First, several provisions will increase the cost of employer-sponsored insurance (ESI), including new insurance requirements and mandates, and a tax on high-cost health plans. Employers who don’t offer a minimum level of coverage deemed essential by the federal government will face a penalty of $2,000 per worker, but as the authors point out, Obamacare’s other “requirements will increase medical costs for many companies. It’s important to note that the penalty for not offering coverage is set significantly below these costs.” (more…)