March 26, 2012

Financial Impact of Health Reform on Employer Benefits
not as Significant as Anticipated

Effects of ANA varied depending on employer size; benefits strategies delayed or changed

Cary Conway Media/PR Consultant

CHICAGO and WASHINGTON – In spite of employer fears, the financial impact of the provisions in the Affordable Care Act (ACA) have not been as significant as anticipated for most businesses and fewer U.S. employers responded that they plan to drop coverage due to the law’s mandate than was reported in 2010. These are some of the key findings from a new 2012 employer survey conducted by the Midwest Business Group on Health (MBGH) and co-sponsored by the National Business Coalition on Health (NBCH), Business Insurance and Workforce Management.

Many survey respondents indicated support for the ACA provisions that enable changes in provider payment, medical care coordination and providing medical cost and quality information for consumers. The survey also revealed divergent views among employers on whether the Supreme Court will or should strike down the individual mandate or the entire Act. This is the third national survey in a series conducted by MBGH since 2010 to gain an understanding of areas of most concern to employers related to health reform, and to help educate and inform purchasers and policymakers.

“While employers uniformly expressed concern with the administrative costs and reporting burdens in the law, there was surprising support for many of the coverage and system reform provisions,” said Larry Boress, MBGH president and CEO. “It’s clear that what some call ‘Obamacare’ is actually a compilation of insurance, health system and coverage reforms that are perceived by many employers as having some good, as well as having some costly, impacts. In addition, as employers have evaluated their options, the vast majority have determined there is value in continuing to offer health coverage in order to retain and recruit talent, as well as to ensure a productive workforce. Small employers fear the potential financial impact of future ACA changes, while larger organizations see the potential of improved cost and quality improvements as enabled through many of the requirements of the ACA.”

Key survey findings:

• In contrast to what employers indicated in the 2010 survey, many of this year’s respondents found complying with the ACA provisions cost them less than anticipated.
• While large employers found the cost impact of the ACA in 2011, including extending coverage to adult children up to age 26, was less than 2%, most small- and mid-sized employers responded that their increases were up to 5%.
• Only 6% of all employers said they were likely to pay the penalty fee and drop health benefits coverage for employees in order to save money. This is down by more than half from the 2010 survey results.
• Less than 30% of employers that are likely to drop coverage will raise salaries to enable individuals to buy health coverage on their own.
• Many small employers anticipate increases in their health benefit costs over 10% in the future due to the ACA.
• Of employers offering retiree benefits, 57% said they are likely to continue to offer these benefits.
• Employers, particularly larger ones, expect the Supreme Court to uphold the ACA but strike down the individual mandate. Of all employers, 42% hope the ACA is struck down in its entirety.
• Employers favor repeal of the following ACA provisions: the excise tax on high cost plans; capping flexible savings account (FSA) contributions; prohibiting using FSA amounts for over the counter drugs with prescriptions; and reporting cash value of benefits on W-2 forms.
• Employers favor retaining the following ACA provisions: removal of co-pays for preventive care; mandating coverage of preventive services; creation of Health Insurance Exchanges; elimination of annual and lifetime limits on essential benefits; and extending coverage to adult children.
• Employers are split on the value of some provisions, including requiring employers who drop coverage to offer vouchers to help people buy insurance; imposing penalties on employers who do not provide health benefits; mandating individuals obtain health insurance; and defining minimum essential benefits.

 “Employers appear to be warming up to the potential value of ACA provisions on prevention and wellness incentives, provider payment reform, medical homes, ACOs, and cost and quality transparency even while expressing continued frustration with the law’s slow pace towards cost containment,” said Andrew Webber, NBCH president and CEO. “And while employers seem to have less of an appetite for dropping coverage than noted in previous surveys, alternatives like defined contribution strategies are beginning to be considered and bear close monitoring in the years ahead.”

Survey details:

The online survey was conducted from February to March 2012 on the intentions and perspectives of employers concerning the Accountable Care Act. There were approximately 440 respondents from 34 states; 58% representing employers with more than 500 employees and 25% representing employers with 50-500 employees. Survey partners also included Aon Hewitt, Buck Consultants, Chicagoland Chamber and the Illinois Chamber of Commerce.

A summary of the findings is available on MBGH’s website and a detailed report can be ordered for $100. Send an email to info@mbgh.org.

About Business Insurance and Workforce Management
These publications are part of Crain Communications Inc, one of the largest privately owned business publishers in the U.S., offering publications and related Web sites in North America, Europe and Asia. Business Insurance and Workforce Management offer vital news and information to industry leaders and consumers worldwide. www.crain.com

 

About the National Business Coalition on Health
NBCH is a national, non-profit, membership organization of 56 purchaser-led business and health coalitions, representing over 7,000 employers and 25 million employees and their dependents across the United States. NBCH and its members are dedicated to value-based purchasing of health care services through the collective action of public and private purchasers. www.nbch.org

Note to editors: The full survey findings are available to accredited media upon request.