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Employers in the Dark About Effects of Health Care Reform
60 percent say they lack information to make important business and benefits decisions

By SHRM Online staff  9/21/2011

More than a year after the passage of the Patient Protection and Affordable Care Act, U.S. employers remain uncertain about the lingering effects that the sweeping law will have on the employer-based model for benefits. A survey report by employee benefits brokerage and consulting firm Conner Strong & Buckelew, Health Care Reform Survey: What We Know and What's Coming provides a baseline of employer views and highlights the continuing uncertainty.

Respondents to the August 2011 survey, fielded to the firm's current and prospective clients and other businesses, included U.S. employers in all industry segments, most of which are East Coast-headquartered businesses offering comprehensive employee benefits to full-time workers.

The survey results are intended to represent what's “on the minds of business and HR leaders” as the health care issue continues to be front and center on the public docket. Highlights of the results are presented below:

28 percent of respondents reported that health care reform added 6 percent to their 2011 benefits plan renewal costs, while 24 percent reported that reform added between 4 percent and 6 percent to their 2011 renewal costs.

In thinking ahead to 2012, 32 percent of respondents expect minimal increases attributed to health care reform. However, the results were mixed, as 20 percent expected a larger increase related to reform.

A good deal of concern remains about the short- and long-term impact of the law. Toward that end, 52 percent of respondents were concerned about their ability to offer benefits to their workers in the future. Yet uncertainty remained a constant when it comes to the law. Whether it’s the upcoming presidential election or court battles, 44 percent said it’s still too early to measure the impact of the law, while 32 percent believe that it will hurt their business. In the end, 40 percent of respondents believe that Congress or the courts will not alter or revoke the law, 36 percent believe changes might be made and 24 percent are unsure.

In thinking ahead, close to 50 percent of respondents are planning to make plan design/coverage changes to their benefit plans to contend with the impact of health care reform.

2014 is when major pieces of the law will take effect. For example, the advent of state exchanges and penalties on employers do not offer coverage, or offer inadequate coverage, take effect. Perhaps because of the uncertainty of the law or a lack of appreciation for the magnitude for the 2014 changes, 56 percent of respondents have yet to begin to plan formally for its impact.

By 2014, many employers will have to decide whether to continue to offer coverage or pay a penalty to the government. The issue has gained a good deal of attention as employers and plan sponsors have begun to calculate the cost of coverage vs. the cost of the penalty. Some 60 percent of respondents have indicated that they do not plan to eliminate coverage, while 28 percent are still evaluating the matter.

In examining the issue of dropping coverage for workers, 96 percent of respondents said it is important to their business culture that they continue to offer benefits. Furthermore, 92 percent believe that if they did drop coverage, it would be received unfavorably by their employees.

When thinking of the full impact of the law and areas of concern, 68 percent of respondents were concerned with its expected new costs, 60 percent indicated they were concerned with the many unknown aspects of the law, and 56 percent said they were concerned about costs that insurance companies might pass along.

In spite of the overwhelming information available about the law and its near-term impact, when asked if they had enough information to make important business and benefits decisions, some 60 percent of respondents said they did not and 64 percent reported that their employees did not understand the changes related to the law.

The law has forced organizations to engage senior leaders in examining its impact. Toward that end, 64 percent of respondents report that C-suite executives have been involved and engaged in making decisions related to the law. Yet only 28 percent report having created a formal committee or process to review the impact of the law on a continuing basis.

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