Mercer: PPACA May Not Spur Group Plan Terminations

By Staff Writer

November 09, 2010 at 07:00 PM

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Few employers say they expect to pay a penalty rather than provide group health coverage in 2014, when "employer responsibility" provisions of the Affordable Care Act are set to take effect.

Mercer, New York, a unit of of Marsh & McLennan Companies Inc., New York (NYSE:MMC), has published that finding in a summary of results from a recent survey of about 2,800 employer-sponsored health plans with 10 or more enrollees.

The drafters of the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA), tried to discourage large and midsize employers from letting employees go uninsured by imposing a penalty on employers that fail to provide group health coverage.

For many employers, the penalty payment could cost less than group health coverage, Mercer says.

Mercer asked employers whether they would drop group coverage in 2014 in response to the penalty provision.

Only about one-fifth of employers with 10 to 500 employees, and just 6% of employers with 500 or more employees, said they are likely to shut down their health plans and pay the penalty in 2014, Mercer says.

But Mercer staffers note that the idea of simply dropping coverage and letting employees buy individual coverage through the new health insurance exchange system seems to be appealing to many small employers, who tend to have little negotiating power.

- Allison Bell

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