CHICAGO, June 7 (Reuters) - At least 30% of employers are likely to stop offering health insurance once provisions of the U.S. health care reform law kick in in 2014, according to a study by consultant McKinsey.

McKinsey, which based its projection on a survey of more than 1,300 employers of various sizes and industries and other proprietary research, found that 30% of employers will "definitely" or "probably" stop offering coverage in the years after 2014, when new medical insurance exchanges are supposed to be up and running.

"The shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike," according to the study, published in McKinsey Quarterly.

"While the pace and timing are difficult to predict, McKinsey research points to a radical restructuring of employer-sponsored health benefits."

Among employers with a high awareness of the health reform law, the number likely to drop health coverage for workers rises to more than 50%, the report predicted.

The numbers compare to a Congressional Budget Office estimate that only about 7% of employees currently covered by employer-sponsored plans will have to switch to subsidized-exchange policies in 2014, McKinsey said.

An Obama administration official said the McKinsey study contradicts other research, including studies by the Urban Institute and Rand Corp., that suggests the percentage of employees offered insurance by their employers will not change substantially under the Affordable Care Act.

In Massachusetts, where health reform uses a similar structure that includes an insurance exchange, a personal responsibility requirement and an employer responsibility requirement, the number of individuals with employer-sponsored insurance has increased, the official said.

The McKinsey study also found that at least 30% of employers would gain economically from dropping coverage even if they compensated employees for the change through other benefit offerings or higher salaries.

Losing employer-sponsored insurance would not prompt workers to leave their jobs, contrary to what many employers assume, McKinsey also predicted.

The study found more than 85% of employees would remain at their jobs even if their employer stopped offering insurance, although about 60% would expect increased compensation.

(Reporting by Susan Kelly; Editing by Tim Dobbyn)

© 2010 Thomson Reuters. Click for Restrictions.

EBA Editor's Note: There were questions rasied about this survey. Read about that here. And McKinsey's response here.

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access