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McKinsey health care study criticized for flaws

David Gura Jun 21, 2011

McKinsey health care study criticized for flaws

David Gura Jun 21, 2011

Kai Ryssdal: A couple of weeks ago a new report about the health care overhaul got a lot of attention. Pretty much everywhere — in Congress, in the media, including us. McKinsey the consulting firm did a survey. They asked employers about their plans for 2014, when the health care law goes into effect. Thirty percent of ’em said they’d consider dropping employee health care benefits altogether. That’s a very different outcome than almost every other report that’s been done.

Marketplace’s David Gura explains why.

David Gura: No one knows — with 100 percent certainty — what’ll happen in 2014.

Henry Aaron: Once the Affordable Care Act is in effect, we’re going to be in new territory.

That’s Henry Aaron, an economist at the Brookings Institution. He wonders whether employers will change their benefits. Or offer benefits at all when people can buy insurance at open exchanges.

Aaron: Most of the studies to date have concluded that the vast majority of employers — and virtually all large employers — would continue to offer health insurance if they do so now.

So why is that? Allison Hoffman is a health care policy expert at UCLA Law School.

Allison Hoffman: The dollars that they spend on health benefits for their employees are excludable from taxes.

In other words, it might be in their best interest to keep offering benefits, since…

Hoffman: They’re actually getting a large part of that subsidized — essentially — by not having to pay taxes on it.

Politicians questioned McKinsey’s conclusion because it was so different from some other reports. Hoffman says there’s a reason the McKinsey data stood out.

Hoffman: One thing that we have to keep in mind when we look at the results of something like this, is that it’s a survey, and they’re asking people what do you think you’ll do in 2014.

McKinsey wouldn’t talk with us, but in a statement, the company said it stands by the survey — that the report was based on opinion, not sophisticated economic models. Hoffman says that doesn’t mean the report has no value.

Hoffman: It’s an indicator that employers are thinking about these issues. Whether it plays out is a whole ‘nother story…

One that we won’t know the ending to for a couple more years.

In Washington, I’m David Gura for Marketplace.

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