Almost all firms to transition people to exchanges
A majority of companies will shift from employer-based health coverage to plans sold on the federal marketplace by 2020, according to a new investor report by Standard & Poor Capital IQ, reports McClatchy DC. The report--based on S&P's 500 companies--found that such a change would save a total of $689 billion through 2025.
Apparently, the transition will not take long. Out of the S&P 500 companies, 10 percent will make the change by 2016, 30 percent by 2017, 70 percent by 2019 and 90 percent by 2020, according to McClatchy DC.
"Once a few notable companies start to depart from their traditional approach to healthcare benefits, it's likely that a substantial number of firms could quickly follow suit," the report states. "The result would be a dramatic departure from the legacy employer/employee payroll deduction benefit provision relationship, and could quickly be the modern day equivalent of companies moving from defined benefit pension plans to defined contribution programs."
If this change occurs, employers may give their workers a stipend to pay for exchange plans as opposed to sponsoring a plan themselves, notes the New York Times. But the question remains, who will pick up the check? The costs may fall into the lap of the federal government via subsidies, or perhaps individuals who pay more for their healthcare.
"We still expect some companies to hold on to their healthcare plans, just as some private companies still have pensions," Michael G. Thompson, managing director at S&P told the Times. "But we think that the tax incentives for employer-driven insurance are not enough to offset the incentives for companies to transition people over to exchanges and have them be more autonomous around management of their own healthcare."
However, some employers remain skeptical regarding the potential shift. If an employer subsidizes a worker's insurance plan, the subsidy is tax-free for the employee. But if that employer gives the employee a stipend to pay for coverage, that money is taxable income, reports the Times.
But some employers would benefit from shifting their workers to exchange plans. Companies that provide generous coverage to a large, lower-paid workforce could find that they would save money. In that case, workers might actually pay less through exchanges, FierceHealthPayer previously reported.
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