U.S. healthcare law seen aiding employer coverage

Tue Jun 21, 2011 10:00am EDT

* Healthcare law should stabilize employer coverage

* Study shows decline in employer health coverage

WASHINGTON, June 21 (Reuters) - Even though the number of Americans with health insurance through employers has declined, most will continue to get coverage through their jobs after the new healthcare law takes full effect, studies released on Tuesday said.

About 61 percent of non-elderly Americans got their healthcare coverage through employers in 2009, down from 69 percent in 2000, according to a study sponsored by the non-partisan Robert Wood Johnson Foundation. Low and moderate-income families employed by small firms were the most likely to be affected by a loss of employer-sponsered coverage.

Julie Sonier, a senior researcher at the University of Minnesota who helped write the report, said the erosion in employer-sponsored insurance in the decade before the healthcare law was enacted underscored the need for action.

"When people don't have access to employer coverage, they might get public coverage, they might be uninsured, there might be a higher uncompensated care burden at their local hospital. The costs are in the system somewhere," she said in a telephone interview.

A second study by the centrist Urban Institute said it expects the healthcare overhaul signed into law last year by President Barack Obama to help small businesses provide medical coverage to employees.

"Our results show significant health care cost savings (under the law) to firms with fewer than 50 workers, as well as a small increase in the number of people covered by their employer-sponsored plans," the Urban Institute study said.

The law includes some tax incentives for small employers to provide coverage and penalties for large employers with employees who receive subsidized medical coverage on state-based exchanges that will go into operation in 2014.

"The evidence suggests the Affordable Care Act may have a stabilizing influence on small firm coverage," the study said.

The studies counter a recent report by Chicago consulting firm McKinsey that said about 30 percent of employers will "definitely" or "probably" stop offering health coverage once the state insurance exchanges begin operation, which are to provide a place for smal businesses and individuals to shop for health insurance coverage.

That report sparked a fresh round of criticism of Obama's healthcare law by Republicans who are pushing to repeal it. Democrats demanded an explanation of the methodology, since other reports, including the Congressional Budget Office, said the law would have a small impact on employer coverage.

On Monday, McKinsey clarified that its report was a survey of employer attitudes and "was not intended to be a predictive economic analysis" of the impact of the new healthcare law.

The two studies sponsored by the Robert Wood Johnson Foundation that were released on Tuesday said most of the erosion in employer sponsored healthcare since 2000 was by small businesses.

Four states, Mississippi, Indiana, Michigan and Minnesota saw a loss in employer-sponsored coverage that was twice as large a the national average, according to the studies. (Reporting by Donna Smith; Editing By Cynthia Osterman)

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