Nearly two weeks after the consulting firm McKinsey released a study claiming one-third of businesses would drop insurance benefits once health reform kicks in, the company has disclosed how they generated that figure. This disclosure is welcome news. Other studies have not predicted a mass disruptions of the employer-based health insurance market, which quickly made the McKinsey study a useful tool for critics of the ACA and a deep annoyance for defenders of the law.
Under fire from the Obama Administration and others to reveal its study methodology, McKinsey also put out a statement today with the rather absurd claim that its study was not meant to predict how employers would react to Democratic health reform.
The survey was not intended as a predictive economic analysis of the impact of the Affordable Care Act. Rather, it captured the attitudes of employers and provided an understanding of the factors that could influence decision making related to employee health benefits…We understand how the language in the article could lead the reader to think the research was a prediction, but it is not.
But a press release claiming that people took its original survey too seriously is not really that interesting. What is interesting is the survey language and results, which show that McKinsey’s methodology was sound.
Its poll of employers was not a GOP-funded shoddy survey meant to gin up criticism of Obamacare. Rather, the poll was long, complicated, conducted by a well-established polling firm and weighted to reflect the American business community as a whole. (This weighting helps compensate for the fact that the survey was conducted online, which can lead to problematic self-selection.) There are more than 50 questions in the survey, many of them multi-part questions, and the data collected is organized into easy to read cross tabs and breakdowns.
The problem for McKinsey, it seems, is that originally, the company published just an article about the survey that included none of the nuance captured in the poll results. For instance, as noted above, the survey did determine that “30 percent of employers will definitely or probably stop offering” health insurance after the Affordable Care Act kicks in. But the article didn’t say how the survey “educated” respondents first about how the ACA might affect their companies. Here is the full survey question that resulted in the 30% figure:
Starting in 2014, there will be state-run exchanges for individuals to more readily purchase medical insurance on their own. Here are some additional facts:
* Insurance products will be “guaranteed-issue” (i.e., a person cannot be turned down because of a pre-existing condition)
* Insurance companies cannot charge exorbitant rates because of a person’s health. The only factors they can use to “rate” an individual are age and smoking status.
* Individuals whose employers do not offer health coverage, and who have household incomes below 400% (around $43K for a single person and $88K for a family of 4) of the federal poverty level, will receive government subsidies to offset some of the cost. Individuals with incomes above 400% of the FPL will receive no subsidies.
Assume exchanges become an easy, affordable way for individuals to obtain health insurance.
If you were to discontinue offering health insurance, your employees with the following household incomes would pay the following to obtain insurance from the individual exchange for themselves:
Single person Family of four
Household Max annual Household Max annual
Income premium Income premium
$21,660 $1,364 $44,100 $2,778
$27,075 $2,179 $55,125 $4,437
$32,490 $3,086 $66,150 $6,284
$43,320 $4,115 $88,200 $8,397
You would also pay a penalty of $2,000 per employee after the first 30 employees.
Given this information, how likely do you think your company would be to discontinue employee health coverage?
Definitely would: 9.2%
Probably would: 20.5%
May or may not: 41.6%
Probably would not: 18.2%
Definitely would not: 10.5%
The survey also included this question and result:
How have you heard your competitors will respond/How do you expect your competitors to respond to reform?
Wait and see what other companies do: 27.7%
Continue as-is or with minor changes: 27%
Continue offering medical coverage but likely with significant changes: 24.3%
Drop coverage altogether: 1.6%
Drop coverage for some groups: 1.3%
I don’t know: 31.4%
When asked how much their companies spend on medical and prescription drug benefits per full-time employee – something you might expect a health benefit pro to be intimately familiar with – 58.3% said they didn’t know. Asked about their companies’ overall views of U.S. health care reform, 19.5% said their had a positive view, 30.6% said neutral, 22.3% said negative and 27.7% said they weren’t sure.
In other words, this survey, like most opinion surveys about health care reform, can be interpreted many ways. And it’s easy to see how the wording of questions can influence the answers given.
That McKinsey initially seemed to release only the most headline-grabbing data subset is disappointing – the full results are full of all sorts of interesting nuggets like that, compared to very small businesses, about half as many large businesses would probably or definitely drop coverage post-reform. But its initial decision to keep its full data trove secret doesn’t mean the company’s motives were evil or partisan. On the contrary, as Rich Ungar suggested today, McKinsey may have simply been trying to set itself up as the consultant of choice for confused human resource managers looking for guidance about how to react to the Affordable Care Act.
Either way, transparency won in this case. If only we were so lucky about every claim made about health care reform.