Pay the fine or provide healthcare?

06/30/2011

That's the question that McKinsey & Company, a global consulting firm, asked 1329 private sector employers. Well, it wasn't exactly asked like that, but essentially that was the question. The results were quite revealing. Overall, 30% of the employers queried will definitely or probably stop offering employer-sponsored insurance (ESI) in the years after 2014, when many of the rules of the Affordable Care Act will take effect.

The reason for this is that it will be cheaper for most employers to pay the $2000 annual fine per employee for not providing health insurance than to provide healthcare benefits to employees.

McKinsey stated, "Our research suggests that when employers become more aware of the new economic and social incentives embedded in the law and of the option to restructure benefits beyond dropping or keeping them, many will make dramatic changes."...
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