Among respondents analyzing cost impacts, the largest proportion (36%) estimates health care reform legislation will increase their health care costs in 2011 by 1%-2%. Although extending coverage to adult children to age 26 is still seen as the top driver of cost increases, administrative costs and cost-shifting due to reduced Medicare and Medicaid payments to providers have emerged over the past year as major concerns, according to a press release.
To help ease the increased costs brought on by health care reform, 40% of employers are increasing employees’ share of premium costs, 29% are raising in-network deductibles and 28% are increasing employees’ proportion of dependent coverage cost. Many employers also plan to increase out-of-pocket limits and copayments or coinsurance for primary care (27% and 24% respectively).
Although many employers are looking to employees to help manage rising costs, very few plan to eliminate or reduce their health plan benefits as the result of health care reform. Just 2.6% plan to cut health benefits for new hires, 1.6% plan to drop dependent coverage, 0.9% will close health benefits to new hires and 0.8% will discontinue health benefits for active workers or retirees. Only 0.7% of employers plan to stop providing employees with health care coverage in 2014, when “play or pay” provisions become effective.Additionally, although required only to extend health care benefits to dependents until age 26, 60% of employers are going a step further and changing the eligibility requirements for dependents in other benefit plans (e.g., dental, vision, etc.) to conform to the requirements of their medical plans.
Other Cost Saving Measures
Because of health care reform, nearly one in five employers has adopted or expanded their use of wellness initiatives in the last 12 months (18%), and more than one-quarter (27%) plan to do so in the next 12 months, the IFEBP survey showed. Additionally, 38% are expanding the use of financial incentives to encourage healthy behaviors, and 27% are adopting or expanding their disease management offerings.
Employers continue to perceive value in the role of high-deductible health plans (HDHPs) for cost management. As a result of health care reform, approximately one-third of responding organizations (33%) are increasing their emphasis on or assessing the feasibility of HDHPs with a health savings account (HSA). Rarely are employers reducing their emphasis or assessing the feasibility of dropping HDHPs.
Even though employers report several benefits of maintaining their grandfathered status—namely that their plans are exempt from the appeals process and the requirement to provide coverage for preventive care with no cost sharing or annual limits—just 30% expect to maintain grandfathered status beyond the next three years.
Survey responses were received from 1,350 individuals including benefits and human resources professionals, general and financial managers, and other professionals. Those asked to participate in the survey were members of the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialist (ISCEBS).Health Care Reform: Employer Actions One Year Later —Survey Results May 2011 is the second in a series of reports on the impact of health care reform legislation on benefit plans. It is available free to International Foundation members. Non-members can purchase the e-book for $50. Visit http://www.ifebp.org/books.asp?7051E.