New Study Predicts Near-Term Stability

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From The Hill:

By Julian Pecquet – 06/20/11  

Debate over how many people will lose their employer-sponsored insurance (ESI) coverage due to Democrats’ healthcare law continued to rage Monday as another consulting firm predicted a limited impact.

The new study by Avalere assessed several models and other analyses that have examined the issue and concluded that most of them anticipate a limited impact. The study comes two weeks after McKinsey estimated that 30 percent or more of employers can be expected to drop their coverage starting in 2014 as employees become eligible for subsidies to buy coverage on their own.

“Overall, our analysis suggests that the ESI market will be fairly stable after 2014 when key [healthcare law] coverage provisions go into effect,” the Avalere report states. 

Republicans had jumped on the McKinsey forecast to argue that the law violates President Obama’s pledge that people who like their insurance will be allowed to keep it, a powerful talking point going into the presidential campaign. Democrats shot backwith criticism of the study and are demanding that McKinsey explain its methodology.

The Avalere study did however caution that “while near-term changes in aggregate ESI rates are unlikely, longer term erosion — over 10 to 20 years — is possible,” especially if the state insurance exchanges called for in the law prove to be a better value than employer-sponsored coverage. Also, the report cautioned that low-wage workers, small businesses and those with early retirees in particular are likely to turn to the exchanges for their coverage.

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