Obamacare

Employers Poised To Drop Health Coverage

New rules make offering coverage risky and expensive

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No one can predict how many employers will drop health-care coverage in 2014, when the bulk of the Affordable Care Act takes effect. If workers can get affordable health plans on their own next year, though, many more companies may feel it's safe to stop offering company health benefits in the years that follow.

Companies see 2014 as an experiment to watch. "What we're hearing is larger businesses are going to stand back," says Robert Hurley, senior vice president for sales and operations at online health insurance marketplace eHealth (EHTH). "Even the small businesses will wait and see."

Fear of backlash from workers keeps many employers from dropping coverage, as Bloomberg reported in December. Tax deductions for health spending also encourage businesses to keep offering benefits. Still, while few admit it publicly, many American companies would love get out of the health insurance business. For employers, providing health insurance is expensive and the cost increases are unpredictable. Their competitors in most other wealthy nations don't have to bear the same costs: That's usually the government's job.