Contradicting Surveys Create Public Confusion

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From The New York Times:

Douglas Holtz-Eakin headed a group of 105 economists opposed to the ACA

By — June 20, 2011

The debate over the effects of the federal health care law on employer-provided insurance has been intensifying in recent weeks, with controversial polls and consultants contradicting one another about whether employees will benefit or lose coverage by 2014.

Douglas Holtz-Eakin headed a group of 105 economists opposed to the Affordable Care Act.

After nearly two weeks of widespread queries and criticisms, McKinsey & Company, the management consulting firm, posted on Monday the questionnaire and methodology of an online survey it had released that was denounced by the White House and others for contending that nearly a third of employers would definitely or probably drop coverage for employees when provisions of the health care law took effect in 2014.

The White House responded on Monday night. “As we learn more, it’s become clear that this one flawed study from McKinsey is truly an outlier,” Nancy-Ann DeParle, an assistant to the president and deputy chief of staff, said in a blog post.

The White House initially pointed to forecasts by the Congressional Budget Office and other experts whose estimates were much smaller in terms of whether employees would lose some or all coverage. For example, an Urban Institute study to be released on Tuesday suggests that employees in small businesses may receive more coverage, not less.

McKinsey also came under fire for not providing access to the survey’s authors, and for not publishing the questions, the types of employers taking part or the survey methodology.

In posting “details regarding the survey” on its Web site Monday, McKinsey acknowledged that its survey was “not comparable” to the studies by the budget office, Urban Institute or others using economic modeling.

Rather, it surveyed business owners using an online panel. McKinsey said it paid for the survey by Ipsos, a French marketing firm, “to capture the attitudes of employers,” large and small.

In addition, McKinsey seemed to be trying to address the criticisms by the White House and others, asserting that its report was not intended to be predictive.

McKinsey’s explanations did not satisfy Senator Max Baucus, chairman of the Senate Finance Committee, and several from the House who have inquired.

“This report is filled with cherry-picked facts and slanted questions,” he said in a statement. “It did not provide employers with enough information for them to make honest choices and fair evaluations. Rather than correct the major deficiencies in their report, McKinsey has chosen to again stand by their faulty analysis and misguided conclusions.”

Several other reports have focused on small businesses, the group having the hardest time dealing with rising medical costs.

The latest, issued on Tuesday, is by the Urban Institute, a Washington research center. Its study, based on analysis of Census Bureau and Department of Health and Human Services surveys, estimates that employer coverage will increase modestly for workers and their dependents in firms with 50 or fewer employees.

By contrast, Douglas Holtz-Eakin, who was an economic and health policy adviser to Senator John McCain’s presidential campaign, predicts that more than 35 million people will lose employer insurance. “We figured they would all end up in the exchanges,” the state-sponsored insurance agencies to be set up under the new law, he said in a telephone interview.

Over all, including all employers, analyses by a number of widely cited researchers predicted little or no change in employer-sponsored insurance in 2014. They include the Congressional Budget Office, RAND, Lewin Associates and Mercer.

John Arensmeyer, a small business advocate who supports the law, the Affordable Care Act, calls it “a big step in the right direction.” But he said a poll by his group, Small Business Majority, found that more than half of respondents did not know what was in the law.

“Once they learn about tax credits and the exchanges option, they are more inclined to participate,” Mr. Arensmeyer said.

Linda J. Blumberg, an Urban Institute researcher, said, “Contrary to a lot of statements that have been made in the press and elsewhere, the impact of the law on small employers is going to be positive in great degree.”

Mr. Holtz-Eakin headed a group of 105 economists who filed a brief supporting the lawsuit by Republican officials from 26 states seeking to have the Affordable Care Act overturned.

But Dr. Blumberg said Virginia and other states with Republican governors were working to set up the exchanges. Republicans prefer state exchanges to the probability of a federal version if they do not act.

Four states, West Virginia, Maryland, California and Colorado, recently passed laws to establish exchanges, and similar bills have been adopted by one house in a number of other states, she said. “There is a division between what the attorneys general are doing and what governors’ offices are doing,” she said.

Gerry Harkins, who owns a small construction company in Atlanta and is a spokesman for the National Federation of Independent Business, said he would try to “figure out a way to game the system.”

“This whole plan is really slanted toward large employers,” he said. Firms with 10 and fewer workers also should benefit. “The burden falls in the middle.” His company, Southern Pan Services, had 1,200 employees before the economic crisis. It now has “under 100,” he said.

He is considering splitting his company into two units to get under 50 employees each and reduce the $3,000 penalty, for each worker, he will face for his current health plan, which is entirely paid for by employees. Joseph R. Antos, a health policy expert at the American Enterprise Institute, criticizes the health law. He says it has “too much central direction and not enough appreciation for our fiscal situation.”

But Mr. Antos said large employers, who cover the majority of American workers, would probably wait several years after 2014 to see how the new system worked before deciding what to do. Those with union contracts will take much longer, he said.

He said the many variables in the law made predictions difficult. “Whatever you assume, is what you get out of it,” he said

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