Fox Hyped McKinsey & Co. Study But Ignored Admission That It's Not A "Predictive Economic Analysis"
Research ››› ››› JUSTIN BERRIER
After hyping a McKinsey & Company survey that predicted the Patient Protection and Affordable Care Act (PPAC) would cause millions of employees to lose their employer-based health care coverage, Fox did not cover that McKinsey & Co. admitted that their findings were not meant as "a predictive economic analysis." Fox further failed to note a study reinforcing President Obama's claim that employer-sponsored insurance (ESI) markets would be virtually unchanged by the health care bill.
Fox Relentlessly Hyped McKinsey Survey
Doocy Claims Report Shows Employer-Based Health Care Will Be "Completely Different Than What The President Told Us." From the June 8 edition of Fox News' Fox & Friends:
BRIAN KILMEADE (co-host): [It's] hard to find anybody who's not affected by health care and not concerned about what you're going to be looking at in 2013/2014 as Obamacare slips into -- slips into law. And now a new study shows that 78 million Americans will be forced to find other sources of coverage by that time because employers are going to drop -- in terms of one out of every three employers -- plan on dropping their health care plan that they're offering employees and kicking us to the curb.
STEVE DOOCY (co-host): Well, that is completely different than what the president told us about two short years ago. Remember this, as we step back into the WayBack machine?
DOOCY: Well, and when the president was trying to sell us on the health care reform initiative, the estimate from the Congressional Budget Office was maybe 7, 8, 9 million Americans might have to hel -- find other forms of health care. But now, this, the McKinsey quarterly report, says that it could be 78 million. And what would the employers do? Well, when they look at the gigantic cost of health care in the future, they'd just go, "You know what, I'd rather just pay the fine." So, they think that is what may happen. However, going forward, the government may actually have to jack up the fine and make it bigger than 2,000 bucks.
KILMEADE: OK, that according to the official study. [Fox News, Fox & Friends, 6/8/11]
Camerota: Survey "Contradicts President Obama's Repeated Promise" That Individuals Can Keep Their Insurance. On the June 8 edition of Fox News' America's Newsroom, guest host Alisyn Camerota claimed:
CAMEROTA: A blockbuster new report suggesting that the new health care law could lead to a stunning drop in health care provided by employers. Now this comes from McKinsey, that's a well-respected business consulting group, and according to the survey, up to 50 percent of employers that are highly aware of the new law say that they will drop their benefits when the overhaul takes effect three years from now. And that will force roughly 78 million Americans to find other sources of health care coverage. This, of course, contradicts President Obama's repeated promise that, quote, if you like your health insurance, you'll be able to keep it. This survey getting huge pushback from the White House, which says the findings do not reflect other reports on the overhaul. [Fox News, America's Newsroom, 6/8/11]
Andrew Napolitano Uses Survey To Ask If We Will "Have Universal Health Care By Default." From the June 8 edition of Fox Business' Freedom Watch:
ANDREW NAPOLITANO (host): Meanwhile, a recent study by McKinsey & Company found that nearly 1/3 of employers are likely to scale back or terminate health insurance once Obamacare takes full effect, if it's not interfered with by the courts, in 2014. So if Obamacare isn't stopped by the courts, will we eventually have universal healthcare by default because insurance companies will be out of business when they lose so many customers? [Reason Foundation Economic Research Director] Anthony Randazzo, are you surprised about the McKinsey & Company study?
RANDAZZO: Not, I mean, not at all. Every piece of economic analysis going to it ... particularly that we did at Reason, pointed to a whole slew of unintended consequences, and this was just one of them. [Fox Business, Freedom Watch, 6/8/11]
Asman Claims "The Pie In The Sky Promise Of Obamacare" Is Refuted By The McKinsey Survey. On the June 8 edition of Fox Business' America's Nightly Scoreboard, host David Asman claimed:
ASMAN: The pie in the sky promise of Obamacare was that more Americans would have health coverage than ever before, at cheaper prices. That's how the law was sold to the American public, but a new study has found that by the time Obamacare actually goes into full effect, nearly a third of all employers will stop offering their employers -- their employees health insurance. Of course, that's what leading conservatives have been saying all along, even before the law was passed. [Fox Business, America's Nightly Scoreboard, 6/8/11]
MacCallum Hypes Survey Findings, Fearmongers That Congressional Democrats Will Threaten McKinsey. From the June 17 edition of Fox News' America Live:
MARTHA MACCALLUM (guest host): New fallout over an explosive report on the future of America's health care system. ... So this story started a couple of weeks ago with a survey that was done by McKinsey & Company, which is a highly respected business consulting group. So they did research that found that up to 30 percent of employers in this country say that they are likely to drop their employer coverage when healthcare, known as Obamacare, kicks in three years from now. So that would force 78 million Americans, roughly, to find some other source of coverage. Now this report contradicting Obama's repeated promise that, quote, if you like your healthcare insurance, you'll be able to keep it, is getting a ton of attention right now.
So now you've got top Democrats in the House and Senate start to hit back on this report. They're saying that the company will be challenged, in terms of letters they're sending and demanding boxes of documents from everything from who they talked to, to the resumes of the people who put together the information for McKinsey. This is a very developing story at this hour.
MACCALLUM: So what can they do, Chris [Stirewalt]? What kind of power does Congress have in this situation to get their hands on this private company, McKinsey & Company's research and the client they hired to do it?
STIREWALT: Well, in the Senate they have more power. It's a [sic] Democratic controlled. Max Baucus is leading the charge over there, and basically what they can do is drag McKinsey & Company into the Senate, force them to do document dumps, force them to reveal methodology and do those things with subponeas. Now, I'm checking around talking to folks in the business community and checked in with a source over there at the U.S. Chamber of Commerce. And what they're telling me is that this is a matter of great concern for the business community because if people feel that if they speak out, they're going to be subject to this level of scrutiny, that they're not going to be able to put their case forward. So, this is ongoing, but it looks like it's the start of something pretty big. [Fox News, America Live, 6/17/11]
Fox Nation: "SURVEY: 30% Of Companies To Drop Health Coverage Because Of Obamacare." On June 6, Fox Nation posted a portion of a Market Watch article under the headline, "SURVEY: 30% of Companies to Drop Health Coverage Because of Obamacare." From Fox Nation:
[Fox Nation, 6/6/11]
But Fox Ignored McKinsey's Recent Admission That The Survey Is Not A "Predictive Economic Analysis"
McKinsey & Co.: "The Survey Was Not Intended As A Predictive Economic Analysis." Following pressure to release its methodology, on June 20, McKinsey & Company released a statement saying that they "stand by the integrity and methodology of the survey," but that it "was not intended as a predictive economic analysis." From McKinsey & Company:
The survey was not intended as a predictive economic analysis of the impact of the Affordable Care Act. Rather, it captured the attitudes of employers and provided an understanding of the factors that could influence decision making related to employee health benefits.
As such, our survey results are not comparable to the healthcare research and analysis conducted by others such as the Congressional Budget Office, RAND and the Urban Institute. Each of those studies employed economic modeling, not opinion surveys, and focused on the impact of healthcare reform on individuals, not employer attitudes.
Comparing the McKinsey survey to economic estimates, such as the CBO's, is comparing apples to oranges. While the McKinsey Quarterly article about the survey cited CBO estimates, any comparison is not apt. We understand how the language in the article could lead the reader to think the research was a prediction, but it is not.
As noted, the survey only captured current attitudes. Employers' future actions will be determined by many considerations. Among them: Medical cost inflation, the details of new state health insurance exchanges, employee attitudes toward compensation and benefits, a company's ability to attract and retain talent, actions taken by competitors and the state of the economy. These are just some of the many factors likely to influence employer behavior in the future.
To reiterate, the survey reported in the McKinsey Quarterly was not an economic forecast, but rather a measure of attitudes intended to understand the factors involved in employer decision making regarding employee benefits. [McKinsey & Company, 6/20/11]
White House: "Flawed Study From McKinsey Is Truly An Outlier." Following McKinsey & Company's statement, the White House responded that "as we learn more, it's become clear that this one flawed study from McKinsey is truly an outlier." From the White House:
Today, McKinsey acknowledged that this report is at odds with these independent analyses and said the report was not intended to predict whether or not employers would offer health insurance. Here's what McKinsey said today:
The survey was not intended as a predictive economic analysis of the impact of the Affordable Care Act... We understand how the language in the article could lead the reader to think the research was a prediction, but it is not.
And the new information makes clear that the survey is flawed and raises new questions.
The Affordable Care Act will make health insurance more affordable and make it easier for employers to offer coverage to their workers. In fact, a new study released today from Avalere Health, a respected consulting firm, looked at the validity of the various analyses published on the subject and found that the employer-sponsored health insurance market will be stable after 2014 and that "large employers are unlikely to stop offering coverage ..." And as we learn more, it's become clear that this one flawed study from McKinsey is truly an outlier. [White House, 6/20/11]
Baucus: "This Study Does Not Live Up To [McKinsey's] Reputation - Or Even Come Close." In a statement released on June 20, Senate Finance Committee Chairman Max Baucus (D-MT) assailed McKinsey & Company's "faulty analysis and misguided conclusions." From a press release from the Senate Finance Committee:
"McKinsey has long held a reputation for fair-minded analysis, so it is particularly disappointing that this study does not live up to that reputation -- or even come close. McKinsey made clear and definitive predictions, and, in the face of tough questions, simply changed their story" [sic] said Baucus. "This report is filled with cherry-picked facts and slanted questions - it did not provide employers with enough information for them to make honest choices and fair evaluations. Rather than correct the major deficiencies in their report, McKinsey has chosen to again stand by their faulty analysis and misguided conclusions." [Senate Finance Committee, 6/20/11]
Krugman: "Nobody Should Be Quoting This Study" As Policy Analysis. In a June 21 post on his New York Times blog, Nobel Prize winning economist Paul Krugman wrote:
McKinsey has now released some (not all) of the details from its mystery study. True to form, the company now claims that a study touted as evidence that companies "will" drop coverage was "not predictive." Uh-huh.
So what do we learn? It was basically a poll -- which is a really bad way to assess how firms will make decisions about whether or not to maintain health coverage. Such a decision is, after all, a big issue, one that won't be taken without careful study of the numbers and consequences. A relatively casual answer to a poll probably isn't a very good predictor of that decision.
It's pretty clear that McKinsey was trying to drum up/scout out business, and someone had the bright idea of weighing in on policy debate on the Republican side. Bad idea, and nobody should be quoting this study for that purpose. [New York Times, 6/21/11]
Fox Also Ignored A Similar Study Which Reinforces Obama's ESI Claims
Avalere: "The Overall ESI Market Will Likely Remain Relatively Stable After 2014." Despite hyping the McKinsey study, Fox News ignored a report by Avalere Health which showed that "the ESI market will be fairly stable after 2014 when key [PPACA] coverage provisions go into effect." From Avalere Health, LLC:
Overall, our analysis suggests that the ESI market will be fairly stable after 2014 when key ACA coverage provisions go into effect. The microsimulation models estimates from RAND, the Urban Institute, the Lewin Group and the Congressional Budget Office (CBO) show net changes to ESI ranging from -0.3 percent to + 8.4 percent compared to baseline projections without ACA implementation - not major changes in the market (Figure 1). Similarly, large-scale employer surveys and analyses conducted by benefits consultants, investor groups, and other consulting firms also confirm that most employers will remain committed to providing coverage. Stability in ESI is driven by expectations that large firms, whose policies cover more people than small- and medium-firm policies combined, will continue offering health benefits. Moreover, small businesses that will benefit from new economies of scale in the small business exchanges are likely to offer coverage for their employees through the exchange and possibly newly offer coverage if they previously did not. [Avalere Health LLC, 6/17/11]