This week, the consulting firm McKinsey & Company released the detailed methodology and results of its survey of 1,329 American employers about their attitudes regarding federal healthcare reform (ObamaCare). All of the survey respondents had either primary decision-making authority or influence in the decision-making process with regard to medical benefits for their employees. The results provide a stark contrast to the positive projections of the CBO and others who had predicted that ObamaCare will have a negligible impact on the healthcare offerings of employers.

When respondents were asked about their prior knowledge of the new regulations of ObamaCare, 48.7% of all employers admitted that they were either “not at all familiar” with the employer mandate (which will levy penalties against all businesses with more than 50 employees that do not offer health insurance) or “have heard of it, but don’t know much about it.” Since, in many cases, these penalties will cost less than the price of health insurance for all employees, many businesses may simply decide to drop coverage altogether, absorbing the cost of the fine. Although the mandate does not take effect until 2014, such large scale changes in company policy take time to develop and properly implement, and this initial lack of awareness about ObamaCare’s consequences is startling.

Furthermore, the study showed that, while 24% of all employers with “Low” awareness of the details of the new law would “definitely” or “probably” discontinue employee health insurance post-2014, a staggering 54% of those with “High” awareness plan to drop coverage because of the reform’s mandates. In other words, the more decision makers know about ObamaCare’s effect on their businesses, the more likely they are to force their employees to find health insurance on their own. Those figures indicate a severe underestimation of the future costs of the law by the White House, as millions more employees than previously expected may individually seek federal subsidies through the healthcare Exchange.

The facts provided by the McKinsey study are clear: many employers simply do not know about the details of ObamaCare, but the ones who do are preparing to drop coverage and pay the fine.

-Luke ShuffieldResearch Fellow, Center for Health Care Policy