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.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.