McKinsey claims health reform report isn't "predictive"

McKinsey & Co., speaking of its report about whether employers would drop insurance as a result of health system reform, said any comparisons between its survey and others that previously appeared is "comparing apples and oranges."

Whether policymakers preferred the apples of McKinsey's report, or the oranges of most other studies of employer behavior once reform is fully implemented, depends on whether they liked the flavor of the Patient Protection and Affordable Care Act.

Under criticism from the White House and Democratic leaders, McKinsey on June 20 released its survey questions and methodology for a report issued 13 days earlier. The report stated that one-third of employers would "definitely or probably" stop offering insurance once health reform was fully implemented in 2014.

The Obama administration, as well as House and Senate Democrats, demanded to see a detailed methodology of the survey. They were upset because Republican opponents and other critics of health reform were using the survey results to claim that health reform would be far more expensive than the Obama administration had advertised, because far fewer companies would be offering health insurance.

Their employees then would have to buy their coverage (unless they decided to pay a tax for not buying it) through state-run individual health insurance exchanges, with the government picking up a portion of the cost depending on the buyer's income.

A report by the Congressional Budget Office said 7% of employers would stop offering coverage. Other reports -- a Dept. of Labor-backed study by RAND Corp., another study by the Urban Institute and one by employer consultant Mercer -- had similar results. No study had predicted that one-third of employers would drop coverage.

But when McKinsey released its methodology, the firm said it didn't mean for the results to be "predictive," despite its report being titled: "How U.S. Health Care Reform Will Affect Employee Benefits."

"We understand how the language in the article could lead the reader to think the research was a prediction, but it is not," McKinsey said in a statement.

McKinsey said the major difference between its report and others is that it conducted an opinion survey and that its focus was on employer attitudes. Other surveys, the firm said, employed economic modeling, which uses mathematics and economic variables to determine outcomes. Also, McKinsey said, others had focused on the effect of health reform on individuals, not on corporations. The firm said it stands by its results.

As when McKinsey released its original study, foes and friends of the health reform law had opposite reactions. Health reform law critics said McKinsey, with its 206-page release of survey questions, answers and analysis, proved that its survey was legitimate and represented a legitimate look at what companies will do in 2014.

Reform law defenders, including the Obama administration and Sen. Max Baucus (D, Mont.), said the release of methodology showed how flawed McKinsey's study was.

"McKinsey made clear and definitive predictions, and, in the face of tough questions, simply changed their story," Senate Finance Committee Chair Baucus said in a news release. "Rather than correct the major deficiencies in their report, McKinsey has chosen to again stand by their faulty analysis and misguided conclusions."

A particular criticism of McKinsey's study was that only 51% of respondents had a direct hand in choosing health benefits. Also, in questions about what they knew about the health reform bill, about 40% to 60% of the more than 1,300 respondents said they had heard but didn't know much, or were not familiar at all, with key parts of the legislation.

Some of McKinsey's questions laid out some details of the legislation, and asked respondents in the online survey to answer based on the assumptions and facts it presented.

Other studies' conclusions

As McKinsey's study was under a political spotlight, other reports were being released on the effect of health reform on private insurance.

On June 16, Lockton Companies, a large, independent insurance brokerage based in Kansas City, Mo., released a survey that came closest to replicating McKinsey's figures. Like McKinsey, Lockton conducted a survey. Of its 1,034 business clients who responded, 18.8% said they would consider terminating their group health plans in 2014.

"If we see that a significantly larger number of employees migrate to the insurance exchanges for coverage, then Congress' estimate of the dollars needed to supply subsidies in the insurance exchanges will have been significantly understated," Edward Fensholt, director of compliance services for Lockton, said in a prepared statement. On June 2, Fensholt had testified before the House Energy and Commerce Committee's Subcommittee on Health that Lockton's clients were "very, very apprehensive about the mandates. We want Congress to know: U.S. jobs are at stake here as employers wrestle with the true cost of health reform to their businesses."

But Avalere Health, an advisory firm, on June 17 released a study of studies in which it found a consensus that the employer-sponsored insurance market "will be fairly stable after 2014 when key ACA coverage provisions go into effect."

On June 21, the Robert Wood Johnson Foundation released two reports. One showed that the percentage of nonelderly Americans getting insurance through their jobs dropped to 61% in 2008-09 from 69% in 1999-2000, representing 7.3 million fewer insured Americans. The other report, based on an analysis of Urban Institute data, said health reform would actually increase the insured rate of employees at firms with fewer than 100 employees, from 43.4% to a projected 47.6%.