Employers Relieved as Obamacare Stands

Mercer survey finds employers reacting positively to the SCOTUS verdict in King v. Burwell.

A Mercer survey of nearly 600 employers finds most are feeling either positive or unconcerned about the Supreme Court’s ruling in a case that could have gutted the Patient Protection and Affordable Care Act (ACA).

The U.S. Supreme Court’s ruling about health exchange subsidies under the ACA was called “a status quo decision” by one expert speaking with PLANSPONSOR shortly after the ruling came down.

J.D. Piro, senior vice president at Aon Hewitt and leader of Aon Hewitt’s Health Law Group, said few if any employers had slowed down ACA-driven health benefit changes while waiting for a ruling in King v. Burwell, “but now they know they don’t have to change anything.” Mercer’s research confirms this—finding 5% or less of employers had paused ongoing changes to their health benefits while waiting for the decision.

The survey also revealed employers are more likely to see the ruling as a positive than a negative in terms of impact on their organizations—especially among employers providing coverage to their retired workers. In fact nearly half of employers offering health coverage to their retired workforce (45%) feel “relieved that they will be able to continue steering pre-Medicare retirees to public exchanges now that subsidies are guaranteed.”

Overall employers are pretty agnostic about the long-term implications of King v. Burwell, and on the ACA in general. Fifty-four percent of employers surveyed by Mercer said they don’t have strong positive or negative feelings about the survival of Obamacare. This compares with 29% having a “positive” or “strongly positive” reaction, and 17% citing the decision as a “negative” or “strongly negative” outcome for their business. A sizable minority (16%) of employers believes public exchanges “have limited their employees’ ability to access care in a timely manner.”

NEXT: Some ill will remains on ACA


Perhaps due to distrust in the exchanges, Mercer says employers are “much less likely to consider the public exchanges as an alternative source of coverage for currently eligible part-time employees” than they are to consider the exchanges for retired populations. Just under a fourth (24%) of respondents that provide coverage to employees working fewer than 30 hours per week said they are considering this strategy or already have it in place.

“The largest employers are even less likely to see the public exchange as a viable alternative source of coverage for their part-timers,” Mercer says, as just 16% of those employers with 5,000 or more employees indicated as much. “Unlike with retiree coverage, employers may use health care benefits for part-time employees as an attraction and retention strategy and a way to drive employee engagement. And because part-time employees are still working, it might be harder for them to qualify for a subsidy than an early retiree.”

Mercer urges employers to consider whether making part-time employees ineligible for employer coverage raises any legal concerns. “For example, practitioners have wondered whether reducing a formerly eligible employee’s hours to below 30 to make them benefit-ineligible might violate either ERISA 510’s prohibition on taking adverse employment actions to avoid attainment of a benefit, or a provision in the ACA banning discrimination against an employee in retaliation for obtaining an exchange subsidy,” Mercer explains.

“The good news we see out of this survey is that employers are starting to see win-win opportunities in the availability of subsidized coverage through the public exchanges,” notes Tracy Watts, Mercer’s leader for health reform. “Also, it’s a good thing employers weren’t too distracted by all the buzz around this case, because they need to be collecting data now to provide the reporting information required in early 2016. And let’s not forget that about a third of employers are on track to hit the excise tax in 2018 unless they take steps to avoid it.”

Further analysis of the key findings is found on Mercer’s US Healthcare blog:  www.ushealthnews.mercer.com.