A report by the not-for-profit Employee Benefit Research Institute (EBRI) shows that many U.S. employers are likely to pass along further health benefit cost increases to workers, including those related to expanded coverage requirements under the health care reform law. And many workers are expecting such cost increases.
Specifically, more than 40 percent of employers say they are likely to pass along cost increases to workers, and about half of workers expect their health benefit costs to go up whether related directly or indirectly to the Patient Protection and Affordable Care Act, according to the report Employer and Employee Reactions to Health Care, published in the January 2011 EBRI Notes. However, a majority of employers and workers admit that they are not very knowledgeable about the new law.
“This new legislation brings a degree of uncertainty to both employers and workers about their health plans,” said Paul Fronstin, director of EBRI’s Health Research and Education Program and author of the report. “For employers, it is how their plans will be administered. For workers, it is how much of the costs will be passed on to them.”
The findings primarily come from the 2010 EBRI/MGA Consumer Engagement in Health Care Survey (CEHCS), fielded in August 2010. In addition, EBRI's analysis uses data from the Society for Human Resource Management's Organizations’ Response to Health Care Reform poll, fielded from July 22-Aug. 3, 2010.
Little Savings Pass-Along
EBRI reports that employers are more likely to pass along cost increases than cost decreases:
• While 41 percent say they were likely to pass along cost increases, only 30 percent were likely to pass along any cost decreases that were related directly or indirectly to health reform.
• While 23 percent were highly likely to pass along cost increases, only 10 percent were highly likely to pass along cost decreases.
Future of Health Benefits
Looking at the future of employment-based health coverage, EBRI reports that:
• 31 percent of workers with private insurance expect their health care coverage to decline, while 34 percent expect their benefits to be unchanged. A minority foresee improved health benefits.
• 32 percent of workers think that their employer is likely to continue offering health benefits after 2014, and another 23 percent think that their employer is very likely to continue offering employment-based health plans.
However, despite employees' pessimism, few employers had decided to drop health care coverage: Less than 1 percent have conducted an analysis and decided to drop coverage, and less than 1 percent have decided to drop coverage without conducting an analysis, according to the report.
Stephen Miller is an online editor/manager for SHRM.
Globally, Health Insurance Cost Expected to Rise More Than 10%, SHRM Online Benefits Discipline, January 2010
Rising Cost Tops Employees' Health Care Worries, SHRM Online Benefits Discipline, December 2010
SHRM Health Care Poll: Employers Respond to Challenges, HR News, September 2010
Increased Health Care Cost-Shifting Expected in 2011, SHRM Online Benefits Discipline, June 2010
SHRM Online Benefits Discipline
SHRM Online Health Care Reform Resource Page