Benefits December 8, 2010

Many Employers Have Yet to Study HCR Fiscal Impact

December 8, 2010 (PLANSPONSOR.com) – Eighty-four percent of those in a recent Ernst & Young poll said managing the changes resulting from health-care reform is a very important or critical business issue for U.S. employers.
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A news release said 40% of responding employers report they have not undertaken what they consider to be a full analysis of the financial impact of the law, but they are continuing to evaluate what such changes will mean for their businesses and making the necessary adjustments to their current business models.

“The health care reform law brings with it some of the most significant changes seen in decades for employers and the benefits they offer to employees,” says Lynne Parrott, an Advisory Services Partner at Ernst & Young LLP, in the news release. “Companies likely to be successful in addressing these changes will be those that can quickly adapt their business models to ensure they are in compliance with the law, have the ability to offset the impact of rising health care costs on profitability and are able to engage and collaborate with payors, providers and other third-parties in ways they have not previously done before.”

Other findings from the report include:

  • Rising costs associated with health care in general as well as those that stem from compliance with the new health-care reform law are key concerns for employers. Thirty-four percent of respondents said their company’s biggest challenge or risk arising from the law will be the impact of health-care costs on profitability, while 31% cited the impact of added expenses associated with complying with the law. 
  • Only 39% of respondents reported their companies have evaluated what the full effect of the health-care law will be on the cost of employee health benefits. Of this group, 43% said they anticipate significant cost increases as a result of the law, and only 1% said that they expect it to decrease costs.
  • At the time of the survey, 92% of respondents said they intend to continue offering health-care benefits to employees, while 8% said they were considering discontinuing employee health-care benefits.
  • More than three-quarters (76%) of respondents said their companies are at least somewhat likely to increase the amount employees pay for their health-care coverage as part of their cost-reduction strategies.

The report, entitled Moving forward: companies speak out on health care reform, analyzes the issues of greatest concern to executives and their perceived level of readiness to comply with the Patient Protection and Affordable Care Act (PPACA).

From August to September 2010, Ernst & Young LLP conducted an online survey of 381 professionals representing 347 companies. Respondents included C-suite-level executives in Finance, Human Resources, and Tax. 

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