Filed Under:Markets, Employee Benefits

Commitment to employer-sponsored health plans on the rise

What a difference a year can make. A new industry report finds that significantly more employers than last year say they will “definitely” continue to provide health care coverage when health exchanges come online next year.

See also: What will PPACA do to the non-exchange market?

According to preliminary survey results from the International Foundation of Employee Benefit Plans, 69 percent of employers said they will definitely continue to provide employer-sponsored health care in 2014, while another 25 percent said they are very likely to continue employer-sponsored health care.

That’s a 23 point increase from 2012, when 46 percent reported being certain that they would continue employer-sponsored health care.

Opponents of President Obama’s Patient Protection and Affordable Care Act (PPACA) have argued that employers are likely to drop health coverage as an unintended consequence of the law that will negatively affect employees who want to stick with the coverage they know and like.

Estimates have varied widely on just what reform will do to employer-based health coverage. A Deloitte report last summer estimated that one in 10 employers will drop coverage for their employees, while consulting firm McKinsey & Co. drew fire when it stated 30 percent of respondents will “definitely” or “probably” stop offering employer-sponsored health insurance after 2014.

The IFEBP survey found the vast majority of employers (90 percent) have moved beyond a “wait and see” mode, and more than half are developing tactics to deal with the implications of reform. Organizations maintaining a wait-and-see mode decreased from 31 percent in 2012 to less than 10 percent in 2013.

Since the foundation’s first survey regarding reform’s impact on employer-sponsored coverage in 2010, employers have most commonly said keeping compliant was their top focus. In 2013, for the first time, most employers said their top focus is developing tactics to deal with implications of the law.

Still, the survey found estimates of cost increases directly associated with PPACA have increased from 2012 to 2013. Employers with 50 or fewer employees are reporting the largest anticipated cost increase. Conversely, larger employers are the least likely to see significant cost increases. 

Reform is expected to have a bigger impact on smaller employers than larger ones. Small businesses are making more employment-based decisions with hiring, firing and reallocating hours than larger employers, and they are more likely to drop coverage due to PPACA.

Despite employers' commitment to employer-sponsored health coverage, Gallup reported earlier this year that 44.5 percent of Americans got employer-based coverage in 2012, the lowest percentage since President Obama took office.

Results are based on survey responses submitted by more than 950 employee benefit professionals and practitioners through March 26.

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Originally published on BenefitsPro. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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