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Forecast Predicts A Shift Away From Employer-Sponsored Insurance


This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.


And I'm Robert Siegel. President Obama's pick to head the Department of Health and Human Services is winning some Republican support. The president chose Sylvia Matthews Burwell to take over from the embattled outgoing secretary, Kathleen Sebelius. And today, Burwell appeared before the Senate Health Committee. That's where Arizona Sen. John McCain said she is well-qualified to serve as health secretary.

Nonetheless, he encouraged her not to take the job.

SEN. JOHN MCCAIN: Who would recommend their friend take over as captain of the Titanic after it hit the iceberg?

BLOCK: If confirmed, Burwell will oversee the next phase of the Affordable Care Act, which could be another bumpy one. We're going to hear now about some of the 8 million people who've signed up for insurance on the new government exchanges, people whose employers stopped offering health coverage. And as NPR's Scott Horsley reports, that trend may grow.

SCOTT HORSLEY, BYLINE: Andrew Lauber works for a small social service organization in Tennessee. The job always came with health insurance until this year, when his employer, faced with rising premiums, decided to stop offering workplace coverage.

ANDREW LAUBER: It was a decision that they struggled with for some time because it's a benefit that they had always provided.

HORSLEY: The company simply gave employees some of the money it had been using to buy insurance, and encouraged them to shop for their own in the new government exchanges. Lauber says that process was a little intimidating.

LAUBER: Really, all my previous jobs, health insurance had just been given to us. We didn't have to choose the plan or anything. It was just kind of, this is what you're getting.

HORSLEY: Lauber, who's 31 and healthy, eventually settled on a plan with a high deductible. His extra salary more than covers the cost so he was pretty satisfied, even though the plan did require him to change doctors. Josh Parks, who works for an insurance agency in South Carolina, says many employees come out ahead by shifting to the new marketplaces, especially those who qualify for a government subsidy. But Parks admits the transition can be unsettling.

JOSH PARKS: Especially in the South where, I think, there's a lot of people who just don't like the Affordable Care Act. So a lot of times, that's what I'm coming up against; saying, listen, even if you don't like the Affordable Care Act, if we can save you money, the dollars talk.

HORSLEY: To be sure, some workers end up paying more for insurance in the exchanges and beginning next year, big companies that don't offer coverage will have to pay a penalty. Nevertheless, Michael Thompson, of the financial research firm S&P Capital IQ, predicts more and more companies will decide to get out of the business of providing health insurance now that their workers have another way to get coverage through the Affordable Care Act.

MICHAEL THOMPSON: ACA actually creates an opportunity to revisit and redefine that relationship.

HORSLEY: At first, Thompson expects only a few big companies will make the switch. But as firms discover they can save money by shifting workers onto the exchanges, the trend will accelerate until by 2020, Thompson predicts 9 out of 10 employees will be responsible for buying their own health insurance.

THOMPSON: This is where it gets kind of interesting. That's the moment that employees start bearing the future risk of future health care premium rises.

HORSLEY: Thompson likens the change to the move from traditional pensions to 401(k) plans. Employees will have more choices, but fewer guarantees. The Obama administration takes issue with Thompson's forecast, noting that when Massachusetts adopted a similar health care overhaul, insurance coverage through employers actually went up. Still, White House economic adviser Jason Furman says for people who don't get health insurance on the job, the new marketplaces do provide an important alternative, with coverage that may be more flexible, portable and secure.

JASON FURMAN: Reducing that job lock, giving people more freedom to take chances, to move from job to job, maybe even to start their own company, is one of the economic benefits of the Affordable Care Act.

HORSLEY: To make that law politically palatable, the administration tried not to disrupt the employer-provided insurance that most working-age Americans still rely on. Economists have long argued, though, replacing that coverage with insurance that's less tied to the workplace makes good sense.

Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.