Skyrocketing costs could drive employers from paying for coverage

The notion that businesses may drop out of providing healthcare benefits to their employees is no longer far-fetched, according to Kaiser Health News.

Healthcare scholars Brian Klepper and David C. Kibbe argue that whether the Patient Protection and Affordable Care Act is repealed or remains in place, employers have the financial incentive to either opt out of providing coverage completely or move their workers into insurance exchanges.

"Healthcare's relentless cost inflation renders American businesses that offer coverage less competitive than their domestic counterparts that don't. Similarly, they are less competitive than international firms whose employees' coverage costs significantly less," they write.

Should reform be repealed or defunded, the number of uninsured will grow dramatically, creating more pressure for other coverage alternatives.

However, if reform remains in place, many employers would simply pay the $2,000 penalty and current cost-related expenditures to put their workers into the insurance exchanges that will kick in by 2014.

"For small businesses, which are less likely to offer coverage anyway and typically struggle more with these costs, the health exchanges may be an appealing option," note Klepper and Kibbe.

Meanwhile, the continued escalation of healthcare costs could create a crisis that would unleash "a cascade of harshly chaotic consequences," they conclude.

For more:
- read the Kaiser Health News article
- read the Price Waterhouse Coopers study on healthcare cost trends