Employers Say Health Care Reform Should be Phased In

July 6, 2009 (PLANSPONSOR.com) - A survey of 329 U.S. employers conducted by Mercer has found that a majority (67%) favor a phased-in approach to national health care reform.

Only 11% said they favor the enactment of comprehensive reform this year, and the remaining 12% said they are not sure, according to a press release.

Survey respondents were asked to assign high, medium or low priority ratings to 11 components that have been prominent in comprehensive health reform proposals, and they selected quality and market reform as their top priorities (see Employers to Lawmakers: Focus on Health Care Cost, Service Quality ). “Increase incentives to improve health care quality and efficiency, such as by adopting provider pay for performance and health information technology” was the reform element selected as a high priority by the most respondents (60%), while 50% chose to “enact insurance market reforms, including requiring insurance companies to offer individual coverage and eliminating pre-existing condition exclusions and lifetime benefit limits,” the press release said.

Employers remain most opposed to limits on the favorable tax treatment of employer-sponsored health benefits (see Baucus Reportedly Considering Ways to Tax Health Benefits ) and to a mandate for employers (see HELP Committee Details Employer Mandate in Health Reform ) to offer coverage (59% and 52% were opposed, respectively).

When asked how they would be likely to react if a hypothetical reduction in the current tax exclusion for employer-sponsored coverage resulted in an average increase of $3,000 in taxable income to their employees, about a fifth said they would be “very likely” to change the plan or reduce the level of benefits provided to avoid the increase, while another fifth indicated they would be very likely to make no change and let employees absorb the higher tax bill. Few said they would be very likely to discontinue offering a health plan (3%).

Just 24% of respondents said the creation of a public health plan is a high priority for reform.

“The public plan has emerged as a contentious issue,” said Linda Havlin, a Mercer worldwide partner, in the press release . “Health plans are concerned that the public plan’s ability to use government rates for paying providers will make it impossible for them to compete against the plan and that it will potentially set a course for a single-payer system. Providers are concerned about having a higher percentage of their patient revenue based on government rates. Employers are concerned about the potential for more cost shifting if they retain private plans.”

A replay of Mercer’s Web based presentation of the discussion with the employers can be found at http://www.mercer.com/webbriefings .