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Truven report finds employers choosing to drop health insurance won’t reap cost advantages

Posted on July 23, 2012 | No Comments

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A new report published by Truven Health Analytics says that employers choosing to drop their group health insurance plans and pay the penalties under the Affordable Care Act (ACA) would experience no cost advantages. Furthermore, the report suggested that employers who do choose to suspend health benefits would incur sizable operational and productivity repercussions. These negative outcomes, the report concluded, would thus discourage most large employers from shifting employee health benefit strategies after ACA implementation.

Truven reported three key findings. First, employers would experience no immediate or long-term cost advantage by eliminating group health benefits. Second, employers would experience higher costs in scenarios where employees are shifted into exchanges for health benefits. Employees would suffer a significant cut in total compensation in situations where employers eliminate group health benefits and thus force employees to assume benefit costs.

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According to a new Employee Benefit Research Institute (EBRI) report, the uninsured rate shrank for working-age Americans last year. The percentage of non-elderly Americans with coverage increased to 82 percent in 2011, up from 81.5 percent in 2010. Employment-based health insurance coverage rates dropped, however. Although employer-sponsored coverage remains the dominant source of health coverage in the United States, providing coverage for 155.5 million people under age 65 in 2011, the percentage of non-elderly individuals with employer-sponsored coverage has declined every year since 2000.
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