Employers Don’t Know What Health Care Reform is Costing Them

Healthcare Reform Cost Impact: 2012-2013 Survey

While many employers believe that health care reform will not increase costs, more than half of them haven’t even started to calculate those costs. So said this year’s survey of U.S. employers about the effects of health care reform on their businesses.

Short Summary of Findings

Our third annual Health Care Reform Survey reflects responses from more than 1,200 employers of varying sizes, industry sectors, and geographic regions, and shows a marked discrepancy between perception and reality. Download the full report for details, but these are some of the trends that we noticed:

  • A majority of employers still have no idea how health care reform is affecting their bottom line.
  • Although a majority of employers believe their compliance costs have not risen, those actually studying compliance costs say they have.
  • Employers expect to shift costs to employees in the future.
  • Employers are cautious about making wholesale changes to their benefits; very few employers plan to drop group health plan insurance.
  • Employers are now much more likely to give up the grandfathered status that has allowed them to avoid some health care reform requirements—for instance, the requirement to cover preventive health services without cost-sharing.

Employers Have Not Studied the Effect of Health Care Reform

51% of survey respondents had not yet studied the cost of health care reform compliance on their health plans and the majority of employers indicated that health care reform has not generally impacted employee contributions or the nature of benefit plans that were offered.  Employers did note, however, that the cost of active employee health coverage had increased.

Those keeping track find that costs are going up.  Though the majority of the employers “felt” that health care reform had not greatly affected employee contributions and the types of benefits offered, the employers who had actually tracked their compliance costs identified three large cost drivers:

  • Adult child coverage
  • Preventive care requirements
  • Removal of annual/lifetime limits on “essential health benefits”

Among these categories, many respondents said that costs had increased from 2% to more than 5%.

Faulty Perceptions May Be Driving a Slower Strategic Response

Employers are slow to react to cost increases. Only about 25% of surveyed employers plan to adjust other rewards (for instance retirement, vacation, dental, vision, salaries) in order to offset the cost of health care reform.  We’ll have to wait and see whether this trend changes as employers realize the actual cost of health care reform compliance.
Anticipated Responses to Health Care Reform: 2012-2013

rebeccalawrence_60Guest blogger Rebecca Knoll Lawrence is an employee benefits attorney–Assistant Vice President within Willis’ National Legal & Research Group and is a frequent webcast presenter. She has been with Willis since 1998. She received her J.D. from Washington & Lee University in Lexington, Virginia.

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