Employers See Cost Hikes from HCR

January 3, 2011 (PLANSPONSOR.com) – Seventy-four percent of employers in a recent survey said they expect the health reform law will further increase their health care costs.

A Business Insurance news story about the survey it co-sponsored with the National Business Coalition on Health said 42% of large employers – with more than 500 employees – expect cost increases in the range of 2% to 5% from the health care reform law. Some 16% expect cost increases in the range of 6% to 10%, while 11% of large employers expect the law to boost costs less than 1%.

Eight percent of all respondents and 6% of large employers said it is “very likely” that they will drop coverage in 2014 when the new insurance exchanges begin. In addition, 14% of all respondents and 6% of large employers said it is “likely” they will drop coverage.

Employers are most opposed to health care reform provisions that will have little direct effect on their costs. For example, 72% of respondents said they want Congress to repeal a provision which begins next year that bars employees from tapping their flexible spending accounts to reimburse themselves for over-the-counter medications not prescribed by a doctor, Business Insurance said. Similarly, 64% want to repeal another FSA-related provision, which caps the maximum FSA contribution that employees can make at $2,500 a year, effective in 2013.

On the other hand, opposition is much less when it comes to other health care reform law provisions. Only 32% of employers back repeal of the requirement of fully covering preventive services. Fifty-two percent of employers said the provision should be retained, while 16% said it should be modified in some way.

Andrew Webber, president and CEO of the Washington-based NBCH told Business Insurance that employers’ attitudes could change with the “second chapter” of the reform law. That stage begins in 2014, when federal health insurance premium subsidies will be offered to the lower- and middle-income uninsured to buy coverage from commercial insurers offering policies through state health insurance exchanges that are to start operating that year.

Business Insurance said in theory that expansion of coverage should result in a big reduction in uncompensated care, a cost that providers, where possible, now shift in the form of higher charges to patients in employer plans.

Summaries of the survey, “Employer Reaction to Health Reform After the November 2010 Elections,” are available at www.mbgh.org. The full survey, which costs $100, will be available at the end of January. For more information, write lboress@mbgh.org.

The survey, which was conducted between November 29 and December 15, drew responses from 430 employers, of which 43% have more than 500 U.S. employees.