Reform takes aim at benefits, employers say

Employers responding to a post-midterm elections survey say they fear health reform will drive up benefits costs, and more than 20 percent believe it's likely they'll consider dropping employee benefits altogether.

According to a survey conducted by MBGH and co-sponsored by the National Business Coalition on Health (NBCH), Business Insurance and Workforce Management, 53 percent of all employers and 67 percent of large employers say they do not plan to drop health benefits. However, based on the potential penalties and recent modeling of potential impact, 22 percent of all employers said that it is likely that they would consider eliminating benefits.

Roughly three-quarters (74 percent) of employer respondents said they believe it's likely health reform will boost health costs even more than if the legislation was not passed.

Survey sponsors say health reform incentives for wellness programs is helping to drive more employers to expand their wellness initiatives; Almost 60 percent of all employers stated that they will expand wellness programs in light of increased incentives allowed.

"There remains a great deal of uncertainty among employers about how health reform will ultimately impact their efforts to provide health benefits for their employees," said Larry Boress, MBGH president and CEO, in a statement. "However, it's clear that keeping workers healthy is a key focus. In fact, employers are already implementing strategic health management approaches and these are quickly evolving into viable cost reduction strategies."

How health care reform affects wellness programs (source: Council of Smaller Enterprises):

  • The health care reform act provides grants for up to five years to small employers that establish wellness programs.
  • Technical assistance and other resources will be provided to evaluate employer-based wellness programs.
  • A national worksite health policies and programs survey will be conducted to assess employer-based health policies and programs. (Conduct study within two years following enactment)
  • Employers will be able to offer employees rewards in the form of premium discounts, waivers of cost-sharing requirements, or benefits that would otherwise not be provided of up to 30 percent of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard.
  • The reward limit may be increased to 50 percent of the cost of coverage if deemed appropriate. (Effective January 1, 2014)

Other key survey findings from MBGH:

  • Of those who say they will drop coverage to avoid the penalty, only about 20 percent will raise worker salaries to help pay for individual coverage.
  • Sixty percent of all employers and 50 percent of large employers believe the intention of health reform is to eliminate the employer-based system and move to a single-payer system.
  • About one-third of all employers noted that they have assumed all costs of extending coverage to adult children up to age 26; with one-third responding that the cost of extending coverage has been shared with employees.This reflects a change from April when employers were split 50/50 as to whether they were likely to charge more for dependents as a result of the provision.
  • Fewer employers noted that they plan to drop retiree benefits than in April. Of those employers who offer retiree benefits, about a third of large and 12 percent of small employers will continue to offer benefits, 4 percent noted that they will drop benefits, and 4 percent will provide some supplemental plan or contributions to help retirees get coverage.
  • The survey indicates that 65 percent of all employers and more than 80 percent of large employers have done some modeling on how health reform will impact their benefit costs and 25 percent of all employers are showing increases of two to five percent, with 15 percent showing increases of 6 percent to 10 percent.
  • Eighty-six percent of all employers indicated that it's unlikely that current provisions will reduce the rate of health care cost increase.

Quality and cost provisions:

When asked what quality and cost provisions in the law were considered valuable and should be retained, employer responses included:

  • Almost 60 percent want to replace the fee for service with bundled payments;
  • More than 45 percent of all and 52 percent of large employers want to develop accountable care organizations;
  • More than half want to continue to develop the medical home concept;
  • Fifty-five percent of all and 70 percent of large employers want to see development of quality and performance based provider payments;
  • And 62 percent of all and 74 percent of large employers want the law to promote the use of value-based designs and incentives to motivate change.

"The survey results reflect employer frustration that cost containment, as their priority goal for health care reform legislation, is not, at present, being realized," said Andrew Webber, president and CEO of NBCH. "While there appears to be strong support for the legislative provisions related to payment reform, value-based insurance design, medical homes, and accountable care organizations, I think employers are signaling the Obama Administration that these delivery reform and value-based purchasing strategies need to be fast-tracked. Cost containment cannot wait."


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