Employers Continue To Plan For Health Reform Effects

Employers are well aware of the significant changes the Patient Protection and Affordable Care Act will make on their health care plans, and two recent national benefit surveys provide some insight into how employers are responding.

A recent Towers Watson survey acknoweldges that one of the driving forces behind significant health care design changes and cost shifting is health care reform. A majority of employers (53%) are confident that health care reform will be implemented within the anticipated timeline, but 70% of employers are skeptical that health insurance Exchanges will provide a viable alternative to employer-sponsored coverage for active employees in 2014 or 2015.

On top of that uncertainty, 56% of employers believe that they will trigger the excise tax on high cost insurance by 2018. Yet more than three-quarters believe that health care benefits will continue to be a key component of their overall employee value proposition beyond 2014.

Specifically, between now and 2014, employers are planning or considering the following actions, according to Towers Watson:

Increase offering of account-based health plans (health savings accounts (HSAs) and health reimbursement arrangments (HRAs)): 17% intend to add this plan design in 2013 or 2014, which would result in nearly three in four [74%] employers offering an ABHP)

Use value-based benefit designs (49%): Encouraged in the ACA, value-based design is the explicit use of plan incentives to encourage enrollee adoption and appropriate use of high-value services, healthy lifestyles and use of high-performance providers that adhere to evidence-based treatment guidelines

Increase use of preferred networks (58%).

BUSINESS GROUP SURVEY

A recent survey by the National Business Group on Health found that employers had made or were planning to makethe following changes in response to the ACA:

Annual benefit limits. The majority of employers (59%) are not making any changes for 2012 (full restrictions on benefit limits will be banned in 2014). However, 27% said they plan to make changes to annual limits for preventive and wellness services. Another 14% said they will make changes to annual limits for mental health and substance abuse services.

Grandfather status. Twenty-three percent will have at least one benefit option that keeps its grandfather status in 2012, while 19% will drop its grandfather status. Almost half (49%) did not have any benefit option in grandfather status this year.

Default plan for new hires. Twenty-seven percent plan to use their least costly health plan for employees as their default plan for new full-time hires as required by the ACA.

Additional surveys on employer responses to the ACA can be found here and here.

A comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.