SHRM Health Care Poll: Employers Respond to Challenges

By Stephen Miller Sep 27, 2010
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As of midyear 2010, half of surveyed HR professionals said their organizations had taken steps to respond to the comprehensive health care reform legislation enacted in March 2010, despite a continuing lack of clarity on many specifics of the law, according to the second in a series of surveys by the Society for Human Resource Management (SHRM), Organizations' Response to Health Care Reform. Moreover, 54 percent of respondents said that senior management had asked HR to provide an overview of the implications of the health care reform law for their organization.

The survey was fielded July 22-Aug. 3, 2010, among 1,095 randomly selected HR professionals with the job title of manager and above, and among HR professionals identified as working in the benefits area at organizations with 50 or more employers.

The top areas that HR professionals are addressing with senior managers include:

  • Overall knowledge of the reform law.

  • Actions that organizations need to take immediately.

  • Changes the organization needs to make to its current health care plan to be in compliance.

  • The near-term financial implications for 2010 and 2011.

  • Future financial implications beyond 2011.

Keeping Grandfather Status—or Not

Under the "grandfather" provision of the health care reform law and the Obama administration's final interim regulations issued in June 2010, companies can maintain many of their current health care coverage provisions if they do not change insurance carriers, reduce benefits or raise co-payment charges or deductibles significantly.

The poll found that 30 percent of respondents are attempting to maintain their plan’s grandfathered status, whereas 11 percent have decided not to maintain their organization's grandfathered status.

Overall, 21 percent said they will attempt to keep grandfather status to avoid additional costs to the organization and employees, while 9 percent would attempt to keep grandfathered status to avoid having to comply with specific elements of the health care reform law.

In addition, 21 percent of respondents said they are or will be conducting an analysis and shopping different health care options to decide whether to keep their grandfathered status.

However, the poll revealed ambivalence over the grandfather classification: 17 percent said they had not yet begun to consider the issues around grandfather status.

"Whether we consciously choose to attempt to maintain grandfather status or not is very much an individual organizational strategic decision based on sound modeling," commented Michael Murphy, SPHR, a member of SHRM's Total Rewards/Compensation & Benefits Special Expertise Panel and director of compensation and benefits for national retail chain Shoe Carnival, headquartered in Newburgh, Ind.

Gray Areas

Lack of understanding of the details of the law, implementation costs, and employee out-of-pocket costs were reported as the main barrier to implementing the reform law. Nearly three-quarters of organizations report using an insurance broker to inform them about the law, and more than half are relying on resources provided by SHRM.

What do you think is the main impl​ementation barrier of the health care reform law for your organization?

Lack of overall understanding of details of the new law and its impact on my organization.

54%

Cost of implementing.

37%

Employee out-of-pocket cost.

16%

What are the resources your organization is currently using in regard to the health care reform law?

Insurance broker.

73%

SHRM's resources on the health care reform law.

54%

Legal counsel (internal or external).

42%

Consultants.

30%

Internal experts.

17%


Moving Ahead

The top actions organizations are taking in response to the health care reform law are:

  • Working with legal and/or benefits counsel to understand the implications of the law.

  • Sending HR staff to training to learn the details of the law.

  • Partnering with current health care benefits providers to design the 2011 health care plan.

  • Developing a health care cost analysis for organizational leadership.

  • Analyzing the short-term financial impact of the law and the feasibility of offering health care.

About one-third of organizations reported that their plan already meets legal requirements under health care reform to remove all pre-existing condition exclusions for children under age 19 and to remove annual maximums. In addition, 64 percent have implemented wellness programs, and 18 percent are planning to implement them.

Somewhat surprisingly, the poll revealed that only 7 percent of respondents have considered the impact of health care reform on their recruitment and retention strategies.

“Although many organizations have been appropriately focused on the short-term implications of the law, attention should now be turning to more long-term strategies that consider both financial and human capital consequences,” said Mark Schmit, SHRM’s director of research.

Stephen Miller is an online editor/manager for SHRM.

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform web page

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