According to a report issued this week, 86% of single employers and corporations will or are likely to continue to provide health coverage to their employees in 2014. The survey was done in anticipation of the Supreme Court’s upcoming ruling on the Patient Protection and Affordable Care Act (PPACA).
A High Court decision is expected before the end of the month.
The International Foundation of Employee Benefit Plans' (IFEBP) Health Care Reform: 2012 Employer Actions Update survey occurred after the Supreme Court heard oral arguments on PPACA, and was based upon questions to 968 human resources, benefits professionals, and industry experts representing single employer plans or corporations in April.
The research showed that only 1% of the respondents will definitely not provide coverage to all full-time employees in 2014.
“These employers recognize that offering health care coverage is an important benefit that helps retain current employees, attract future talent, and increase employee satisfaction,” said Michael Wilson, International Foundation CEO.
Nearly two in five employers or 39.1%--not even the majority--are beginning to develop tactics to deal with the implications of reform, while 31.3% said they are taking a “wait and see” approach, according to the survey results.
Clearly, employers have several factors hanging over their heads before they can achieve some clarity.
Among those organizations in a “wait and see” phase, 80.7% are awaiting the Supreme Court decision, 62.4% are awaiting more regulatory guidance and 52.1% are awaiting the outcome of the 2012 Presidential and Congressional elections.
However, “wait and see” does not mean employers aren't researching what the future holds: Nearly half of all employers, or 47.2%, have conducted an analysis to determine how health care reform legislation will impact their health care plan costs.
Almost 70% found they expect upheld PPACA legislation will increase their costs in 2012, according to the survey. Cost spending is definitely expected to rise. According to a report released this week, actuaries and economists in the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) are predicting that health care spending will increase about 4% for the next couple of years.
“Employers are redesigning their health plans to remain in compliance and to curb anticipated costs,” stated Julie Stich, the International Foundation’s research director. “The research told us that increasing participants’ share of premium costs is the most common technique, followed by increasing in-network deductibles and out-of-pocket limits.”
Among the 54% of employers that did not state that they will definitely continue to provide coverage to all full-time employees in 2014, the most likely cause stated for discontinuing coverage would be the cost of providing coverage becoming too expensive. This was the cause for less than half of the subgroup, though, as it garnered 45.1% of respondents.
Some wonder, too, how long the blanket coverage can be sustained under the current system due to regulatory arbitrage. They are concerned that the mandated state and/or federal health care Exchanges will end up sucking employees into their web because if the way the health law is written isn’t changed, it will upset the balance and the critical mass of the employer provided group marketplace.
“I've spoken with scores of employers who provide health insurance to their workers through the services of our member firms, and our brokerages are in constant communication with many thousands of clients who provide quality coverage," said Joel Wood, lead lobbyist at the Council of Insurance Agents & Brokers in Washington. "Of course the overwhelming percentage of them plan to continue offering coverage, and view it as important if not essential to recruitment and retention of productive employees. An assessment of that continuing desire is obvious, but not really relevant in the current political and regulatory environment.”
“The question, rather, is whether the subsidy structure of the PPACA's exchanges will pervert the employer-provided group marketplace over time.”
“In short, if the health care cost curve isn't bent; if employers lose flexibility through state and federal regulations; and if the incentive remains to pay a relatively small penalty and send employees to heavily subsidized exchanges, at what point are those employers going to throw up their hands and throw in the towel? We believe that in the absence of serious changes to the subsidies in the PPACA, that day will arrive much sooner than this study suggests,” Wood warned.
The NAIC Exchange subgroups are racing against the clock to finish drafts of Exchange white papers this week so states can have roadmaps for them in time to meet statutory deadlines.
The white papers will be helpful, but there is still a lot of work that needs to be done at both the state and federal level, noted one health insurance regulatory lawyer.
The survey included questions posed in the context of “what are you doing with your plan as a result of health care reform?” The participating organizations represent a wide base of U.S. employers from nearly 20 different industries, including insurance and related fields (21.9%), manufacturing and distribution (15.2%) and health care and medicine (9.9%). Surveyed employers range in size from fewer than 50 employees to more than 20,000.
The International Foundation is a member-driven organization with five decades of experience in studying employee benefits, compensation and financial literacy education and information within the American and Canadian workplace.