Deconstructing Mass. employer health insurance increase

Wouldn’t it be nice to have a crystal ball right now? To see what’s around the bend for group benefits advisers in 2014? Recent data released by consulting firm PricewaterhouseCoopers show that employer health coverage actually increased from the time the health care law took effect in Massachusetts seven years ago. While it’s no true indicator of what will happen with the nationwide rollout of the Affordable Care Act, industry insiders say it could not to some overall trends.

“It’s not surprising,” says George Gonser, CEO of Spring Insurance Group in Boston, about the increase. “When we were planning back in ’06 we thought we’d see a mass exodus by employers, but we didn’t.” In fact, he says his company at the time had about 1,700 businesses as clients and only one group opted to pay the penalty and not offer health insurance. “They came back to us the next year,” he says. 

PwC also reports that employees choosing to take up employer-sponsored health care also saw an uptick under the law. Mike Thompson, principal of the firm’s global human resources services, cautions about drawing stark comparisons between the Massachusetts law and the rest of the country but “it does help frame and understand what some of the demands will be.”

Between 1999 and 2011, PwC’s report says “employer coverage in Massachusetts rose from 70.8% in 2006 to 72.1% in 2011. Nationally, during the same period, employer coverage fell from 68.2% to 58.3%.” PwC’s report also says that qualitative evidence, interviews with HR executives at companies in the state, show that more employees were interested in coverage. The results were of course that 98% of the state became coverage by health insurance.

“Will we get to 98% in other states?” Gonser asks. “I don’t know. Massachusetts is a fairly affluent state and maybe it’s because we phased things out. … I’m concerned what will happen in other states.”

Thompson reminds advisers “there are some parallels between the two laws but they’re not exactly the same.” The differences, he explains is that the employer pay or play mandate in the ACA nationally is stronger than the 7-year-old Massachusetts counterpart, while Massachusetts’ individual mandate is stronger than the national cost for a person to pay a tax to opt out of ACA.

But Gonser remains hopeful. “No matter what, businesses appreciate the value of a benefits plan for its employees.”


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