News In Brief

Companies looking to drop employer-sponsored health insurance?

Lilly Fowler May 6, 2010

CNN has attained internal documents that reveal big companies like AT&T, Deere, and Verizon debated whether to dump “the health care coverage they provide to their workers in exchange for paying penalty fees to the government.”

Is this the unintended consequence of the new health care legislation: companies saving money by opting to pay government penalties, rather than continuing to insure employees?

Although Congress first requested the companies’ documents, at no point did the government reveal that companies were deliberating dropping coverage. But deliberate they did.

At&T, for example, produced a PowerPoint presentation: “Medical Cost Versus No Coverage Penalty.” It found that its health care cost would fall from $2.4 billion a year to $600 million if it stopped providing health insurance to its employees, and paid the penalty instead.

Although companies like Verizon are now denying they’re even contemplating that course of action, records show otherwise. And what would the collapse of employer-sponsored health care mean for health care reform?

Only time will tell, but it’s probably not what President Obama had in mind.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.