80% of Employers Concerned About Health Reform’s Administrative Obligations; 30% Think Exchanges Will Offer Worse Coverage


A new survey by Lockton, Inc.’s Health Reform Advisory Practice reports that 80 percent of respondents are concerned about federal health reform’s additional administrative obligations (figure 2).

The respondents cover a wide portfolio of industries. On the surface, it looks like fewer employers than anticipated by previous surveys (especially McKinsey Global Institute‘s) anticipate dropping coverage to dump their full-time employees into an exchange: Only about one fifth (figure 8). But wait a minute: This understates the total, because almost the same proportion of respondents report that they will restructure their workforce to let go of full-time employees and replace them with part-timers. Those part-timers will almost certainly get coverage via an exchange or Medicaid. That brings the total number of employers who will drop coverage to 36 percent.

Furthermore, 30 percent of the employers believe that the exchanges will offer poorer quality coverage than in the current group market (figure 9). This is undoubtedly correct, as I wrote in my latest research article: The emerging regulations on exchanges confirm that the plans available will be determined by political and bureaucratic whim, rather than consumers’ preferences.

John R. Graham is Senior Fellow at the Independent Institute.