Employers Skeptical about Health Reform Savings

January 27, 2010 (PLANSPONSOR.com) – Some 71% of U.S. employers polled said they are expecting higher health care costs in general if a health reform measure makes it out of Congress and is signed into law.

A news release about two surveys sponsored by Towers Watson and the National Business Group on Health (NBGH) said 69% of employers in the first survey are forecasting that reform would bump up their costs for employer-based benefit programs. Some 35% say health reform will lead to fewer employers offering subsidized benefits. 

Meanwhile, 46% of employers believe health reform will lead to a trimming back of employer-sponsored retiree medical benefits, while 5% say it will increase such offerings.

According to the news release the U.S. employer survey data also showed that:

  • 27% believe health care reform will lower health care quality and decrease the value of benefits that employers offer.
  • 71% believe it will increase access to health benefit coverage.
  • 34% believe it will increase transparency of provider prices, and 30% say it will increase the transparency of provider quality.
  • 34% believe health care reform will increase adoption of total replacement consumer-driven health plans (CDHP) by large employers, while only 9% believe adoption will decrease, and 27% believe there will be no change.

The second survey, conducted by Towers Watson among about 1,000 workers at mid-sized and large U.S. companies, found that 67% believe health reform would result in higher benefit costs, while 54% believe it would reduce their available benefits and lower the quality of health care 53%.

The second survey also found that 40% of employees would not be comfortable purchasing their own insurance in the reformed markets as an alternative to getting coverage through their employer. 

“Although the status of legislative health care reform is currently in limbo, it’s clear that employers and employees alike are concerned over the potential impact reform could have on health costs and their benefit programs,” said Ron Fontanetta, Towers Watson Health and Group Benefits practice leader for Intellectual Capital Development, in the news release.  “While health reform could ultimately provide greater access to health care to more Americans, there is a fair amount of skepticism over whether health reform will be able to curb rising health costs.”

The employer survey was conducted from November 2009 through January 2010 with 507 employers of 1,000 or more employees that collectively employ 11.5 million workers. In a separate survey, more than 1,000 employees at U.S. companies were polled from a national panel from mid- to late November 2009.