Or…

Paul Krugman had a recent post about the McKinsey study that purports to show that up to 30% of employers are planning to drop health insurance coverage due to the Affordable Care Act. The Obama administration and other Democrats seem to be in full denial mode, demanding that McKinsey show its data because it can’t *possibly* be true. Right? RIGHT?!

In some respects, this reaction is reminiscent of the Republicans who were adamant that Democrats take it back about Republicans trying to destroy Medicare in franked mailings and ads.

I’m of the “let’s wait and see the data” variety before I jump on the Democratic bandwagon. Paul’s a pretty smart guy but he may be jumping the gun here. Just because McKinsey isn’t revealing their data doesn’t mean their conclusions aren’t true. You don’t have to be a Republican to consider the possibility that the conclusions are valid.

Here’s just one possible scenario that may explain why McKinsey is holding out. The firms they are consulting for may be planning to layoff a lot of people and hire them back as contractors. If they do that, the employee is responsible for paying health insurance, not the company who is going through a middle man to add staff. Now, your consultants would know about this plan. Presumably, they were the knuckleheads that advised it in the first place. But you don’t want the employees to know what’s coming. I mean, have you *been* in a building that’s going through layoffs?? The people who aren’t wandering around like zombies are busily updating their CVs and contacting their network. No one gets any work done. (well, *I* did but I see now that I was crazy for all the good it did me) It’s a fricking disaster area. And let’s not even talk about the cut throat behavior of people back stabbing each other to make sure they secure the positions that are left. It’s an ugly bloodbath and no one comes out looking good.

So, maybe the reason that McKinsey isn’t talking is because it has to respect the confidentiality of its clients. In this business environment, the bottom line is the bottom line. Companies will do what they have to in order to appease the shareholders and right now, a lot of companies are desperate for cash and can’t cut much more without affecting productivity any more than they have. They still need the people. They just don’t want to have to compensate them so well. If that means laying off and hiring contractors without the burden of health insurance, well, the new Affordable Care Act gives them a great opportunity to do it. They just need to keep everyone working until then.

Of course, this is just a hypothesis. But it could explain the silence on McKinsey’s part. You don’t want to be the bearer of bad news that there is going to be a lot more unemployment soon and a lot more people without health insurance.

I’ll wait to be proven wrong.