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The New Health Dialogue

A Blog from New America's Health Policy Program

Questioning the McKinsey Study - Someone Should Ask Bowen Garrett

Published:  June 15, 2011
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McKinsey & Company released a study last week that has caused a kerfuffle here in DC. The study claimed that 30% of employers “will definitely or probably stop offering coverage after 2014” as a result of the implementation of the Affordable Care Act. 

Opponents of the health reform law quickly seized on that number as further proof of President Obama’s anti-business, job killing agenda and bungling of health reform. House Speaker John Boehner’s office posted a blog entitled: “New Report: ObamaCare Will Eliminate Health Coverage, Cost America Jobs,” which breaks down the “troubling” analysis from McKinsey indicating employers ready abandon employee coverage en masse.

On closer inspection, McKinsey’s analysis turns out to be more troubled than troubling. The McKinsey study runs counter to virtually every other non-partisan review of the law’s impact on employer-sponsored insurance, as was pointed out by Time,Business Finance, Politico, the Washington Monthly and others. Even theWall Street Journal acknowledged “previous research has suggested the number of employers who opt to drop coverage altogether in 2014 would be minimal.” That’s not to say that a study countering common wisdom should be discounted out-of-hand, but it does raise enough eyebrows to warrant a closer look – especially when the common wisdom you are countering is your own.

Ironically, the author of an Urban Institute study used by the White House to refute the McKinsey report is none other than McKinsey’s own Bowen Garrett, the chief economist at their Center for U.S. Health System Reform. In his Urban Institute paper, Garrett dismantles “claims that the ACA would cause major declines in [employer-sponsored health insurance],” calling them, “greatly exaggerated.”

Wait, you mean McKinsey published a study claiming 30% of employers will drop employee coverage, in direct contradiction to the expressed position of one of their head health honchos? Mr. Garrett was unavailable to comment.

A closer look at the McKinsey study turns up other inconsistencies. The company has declined to release the methodology or wording of the survey questions – both of which can bias results. McKinsey did acknowledge that the survey “educated respondents about [employer sponsored insurance] implications for their companies and employees before they were asked about post-2014 strategies.” That alone could have influenced respondents’ answers. Without knowing the survey questions, the “educational” script, or the methodology, it’s impossible to know whether or not the design of the survey would itself generate an anti-health reform result. Such a survey is certainly not a sufficient base to support the authors’ prediction of “a radical restructuring of employer-sponsored health benefits.”

What’s most interesting, however, is that McKinsey – institutionally – agrees. Though officials within the company’s press office were unwilling to speak on-the-record, a well-placed source at McKinsey said, “The objective of the survey was to better understand employers' decision making related to employee benefits today and post reform. We were not making a point prediction or forecast about employer behavior after the implementation of health reform.”

The study’s authors appear to have overreached. Their article begins, “the shift away from employer-provided health insurance will be vastly greater than expected and will make sense for many companies and lower-income workers alike.” That certainly sounds like the type of economic prediction that the McKinsey insider says the study was never intended to be.

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