McKinsey, Politicians Clash over Health Insurance Report

For months, President Barack Obama’s administration and healthcare reform advocates cited studies indicating most people would continue receiving insurance from their employers when the major Patient Protection and Affordable Care Act (ACA) provisions are enacted in 2014. In June, though, a study from McKinsey & Company contradicted those claims and caused a stir among the highest levels of government. The consulting firm’s survey of 1329 employers revealed that 30% would “definitely” or “probably” stop offering coverage after 2014. Employees would then enroll in state insurance exchanges. The report, published in the June issue of McKinsey Quarterly, also indicated >50% of organizations with a “high awareness” of the legislation would no longer offer employer-sponsored insurance. Shortly afterward, Senate Committee on Finance Chairman Max Baucus sent a letter demanding details and asking about the survey’s methodology to Dominic Barton, McKinsey’s managing director. Other Democrats, including the Ways and Means, Energy, Education, and Oversight committees, followed with letters to Mr. Barton, publicly criticized the firm and its findings, and mentioned that McKinsey had not answered repeated inquiries. “The findings of this survey are so markedly out of sync with other assessments that it has raised legitimate questions about the product, including how and why it was created,” a group of 9 Democrats from the House of Representatives wrote to Mr. Barton, according to a letter obtained by the Washington Post. McKinsey responded a few days later with a detailed explanation on its Web site and said, “We stand by the integrity and methodology of the survey.” The company posted the results as well as the 29-page questionnaire, which mentions, “This survey’s objective is to understand how US employers view the role of employee benefits and how their medical benefits approach and offering may change in light of US healthcare reform.” According to McKinsey, “the survey was not intended as a predictive economic analysis of the impact of the Affordable Care Act” and should not be compared with analyses from the Congressional Budget Office, the RAND Corporation, and the Urban Institute that used economic modeling and focused on the reform’s impact on individuals. By contrast, McKinsey focused on employers’ opinions, paid for and developed a questionnaire, and hired a market research company to survey people online, who were part of the research firm’s panel and not McKinsey clients. Still, even after McKinsey released all of the material, Sen. Baucus issued a news release that accused the company of not being forthright and honest. “McKinsey has long held a reputation for fair-minded analysis, so it is particularly disappointing that this study does not live up to that reputation—or even come close,” said Sen. Baucus, according to the release. “McKinsey made clear and definitive predictions, and, in the face of tough questions, simply changed their story. This report is filled with cherry-picked facts and slanted questions—it did not provide employers with enough information for them to make honest choices and fair evaluations. Rather than correct the major deficiencies in their report, McKinsey has chosen to again stand by their faulty analysis and misguided conclusions,” the release continued. Meanwhile, the nonpartisan Robert Wood Johnson Foundation issued 2 reports about health insurance coverage trends. The first, in conjunction with the State Health Access Data Assistance Center at the University of Minnesota, found that 61% of nonelderly people in the United States were insured through their employers in 2008-2009 compared with 69% in 1999-2000. In addition, from 1999-2000 to 2008-2009, the average annual premium for private-sector employees increased 82%, while the average premium for a family increased 75%. The second, coauthored with the Urban Institute, estimated that 151.2 million people would receive employer-sponsored insurance coverage under the ACA compared with 151.6 million people if the legislation were not passed, a 0.3% decrease. It also found that firms’ spending on premiums, assessments, and vouchers would decrease by 0.6% under the ACA, with small companies (<100 workers) seeing their costs fall by 8.7%. The projections were based on an economic model created by the Urban Institute. Avalere Health, LLC, also analyzed the ACA’s impact on employer-sponsored insurance coverage and included research from various sources, including the Urban Institute, the RAND Corporation, the Lewin Group, the Congressional Budget Office, consulting companies, and employer surveys. Avalere concluded that the ACA would have varying impacts depending on a firm’s size, composition, and sector. “The majority of Americans receive health insurance through their employers and many question whether the ACA will signal an end to this practice and lead to erosion of this relatively stable market,” the report’s authors said. “However, the long-term impacts of the legislation on [employer-sponsored insurance] are difficult to predict.”