Paul Krugman called it McKinsey Gate.  The New America Foundation called it a kerfuffle.

Three congressional committees threatened to investigate.

What provoked this outrage?  A survey?!

The survey by the normally respected McKinsey & Co revealed that 30% of employers were likely to drop their employer sponsored health insurance (ESI) after the insurance exchange provisions of the Affordable Care Act (ACA) kicked into place in 2014.  This contrasted sharply with a study by the Congressional Budget Office that predicted that only 7% of employers would likely drop coverage.

The kerfuffle

The McKinsey survey has been described as an “outlier”, inconsistent with the results of other studies, in addition to the CBO study, including Rand, the Urban Institute, and the International Foundation of Employee Benefit Plans.

McKinsey defends its work by stating that it has not produced an economic model but rather has surveyed actual decision makers.  But this response too is not enough.  Some have gone so far as to impugn the professionalism of the survey firm that conducted the research, Ipsos, a French marketing firm.  Many criticized McKinsey’s initial unwillingness to provide specific methodological details about its study.  Later the firm relented and released specific details but that barely quieted the critics.

As McKinsey admits in its own study, the future is difficult to predict.  Critics argue that when employers are fully informed they will see the advantages of continuing to offer ESI.

The kerfuffle obfuscation

But arguing over the specifics of one study versus another misses the larger point.  To the extent that McKinsey has challenged previous predictions, perhaps their work has positive value. Continue reading →