The White House didn’t rule out Thursday the possibility that millions of workers could lose their current employer-based health insurance under Obamacare, despite President Obama’s assurance that only the smaller number of people who buy policies on the individual market would need to shop for new coverage.
It’s the latest caveat, and a potentially large one, to Mr. Obama’s oft-repeated and emphatic promise that people who like their health-care plans can keep them. With more than two million people receiving cancellation notices from their insurers, the president hedged on that promise Wednesday, saying the “vast majority” of people can keep their health plans under Obamacare.
The president went on to say that the only people being forced to shop for new plans with more coverage are the roughly 5 percent of Americans — about 14 million total — who don’t get coverage through their employers.
But some big employers already have cut health-care coverage for employees, changed plans or reduced benefits, including the owner of the Red Lobster and Olive Garden restaurant chains, Home Depot and UPS. And a report in Forbes on Thursday noted that the administration’s own estimate, published in the Federal Register in July 2010, anticipated that more than half of employer-sponsored plans would be canceled by the end of this year.
“The Department’s midrange estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” the administration said on page 34,552 of the Register.
That would affect more than 75 million people, a major disruption of the private insurance market. Under the law, they would be required to obtain a new plan.
White House press secretary Jay Carney said the potential cancellation of employer-based plans “will not [be] because of the Affordable Care Act, but as they were annually and as they have been annually in the most volatile, underregulated aspect of the insurance market.”
“Every individual company that offers employer-based coverage makes decisions about its costs on its own,” Mr. Carney said. He said Obamacare has resulted in health-care costs growing more slowly, which should encourage employers not to change or cut plans.
Mr. Obama repeatedly promised, though, that premiums would go down under his plan. Liberal backers of Obamacare though have said that even if premiums rise, tax subsidies in the law would reduce the net cost for many.
But a new report Thursday by the National Federation of Independent Business said health-care insurance premiums for small businesses are up in 2013. Two-thirds of small businesses report paying more for insurance premiums per employee this year than they did in 2012, according to the study.
The pro-business nonprofit group found in a survey of almost 1,000 small businesses that owners pay an average of $6,721 a month, or $80,652 a year, to provide health insurance to their employees.
The median price increase in premiums was about 6 percent, though the average increase was closer to 12 percent, a discrepancy that suggests that when premiums are raised, the increase is substantial. More than half of the companies raised premiums by at least 10 percent.
Senate Minority Leader Mitch McConnell, Kentucky Republican, blasted the administration Thursday for imposing a “crushing burden” on small businesses and discouraging companies from finding cheaper alternatives such as self-insurance.
“Maybe the administration doesn’t like self-insurance because it represents a free market alternative to Obamacare,” Mr. McConnell said. “But the fact is, nearly 100 million Americans are already availing themselves of it. And I’m sure most of them really like the greater flexibility and affordability it provides.”
The NFIB report found that most employers are trying to shield workers from the cost increases.
Two-thirds of employees pay the same price for deductibles as they did last year, but 28 percent pay more, and only four percent pay less.
Owners are also covering higher insurance premiums, with 66 percent of small businesses cutting into profits to pay for cost increases, while 40 percent delayed, postponed or eliminated business investment to make room for health insurance. Nearly half of employers also sought to increase productivity to pay for the costs.
The authors of the study say the Obama administration’s flawed rollout of the Affordable Care Act is part of the problem.
“The law’s authors were primarily focused on increasing insurance coverage and expanding benefits — they gave little or no consideration to concerns about cost or who would foot the bill,” said William J. Dennis, the author of the study and a senior fellow at the NFIB Research Foundation.
“Ironically, had they instead made reducing costs a priority, this would have been a natural incentive for increasing coverage. Unfortunately though, this single-minded approach resulted in a law with a rising price tag, and Obamacare’s authors failed to consider that someone has to pay for all the bells and whistles included in the law,” Mr. Dennis said. “That ‘someone’ it turns out is often the small-business community — small employers, their employees and their families.”
The NFIB will conduct the survey once a year for three years to track the impact of the Affordable Care Act on small businesses’ finances.
“We see the results of this year’s research as establishing a baseline; what we will learn from the developing responses in the next two years will tell us more and more about the law and how it changes — or does not change — the behaviors of the small-business community,” Mr. Dennis said.
• Tim Devaney contributed to this report.