Employers Respond to ACA's Financial Impact

Greatest cost effects in 2013 are felt by small firms

By Stephen Miller, CEBS Aug 19, 2013

More than two-thirds of U.S. employers that are providing health benefits have analyzed how the Patient Protection and Affordable Care Act (PPACA or ACA) will affect their health care plan costs, according to a survey by the International Foundation of Employee Benefits Plans.

The survey, ACA’s Cost Impact: Employer-Sponsored Health Plans, found that the most common ways that organizations plan to deal with increased expenses are by shifting costs to employees (53 percent) and by increasing wellness and value-based health care initiatives (36 percent) to encourage workers to maintain good health.

Additional findings include:

  • Very few medium-size and large employers with knowledge of their cost trends are experiencing 2013 cost increases beyond 5 percent due to the ACA, but a considerable portion of smaller businesses are experiencing cost increases above 15 percent.

  • Employers identified the top three ACA provisions affecting 2013 health benefit costs as:

    ThePatient-Centered Outcomes Research Institute (PCORI) fee (38 percent).

    General ACA administrative costs (35 percent).

    Explanations of ACA provisions to health plan participants (28 percent).

  • Employers think the future provisions that will increase costs the most are the transitional reinsurance fee (18 percent) starting in 2014 and the requirement to provide health insurance to individuals who previously were not offered coverage (13 percent).

  • Larger organizations were more likely to identify PCORI fees and communication as the biggest cost drivers, while smaller employers were more likely to identify the costs of adjusting benefits to keep up with minimum value and affordability requirements.

The survey is a companion to the recent 2013 Employer-Sponsored Health Care: ACA’s Impactwhich covered employer concerns about plan design and funding, methods for communicating with employees, grandfathered plan status, reactions to health insurance exchanges, and cost management initiatives. (See the SHRM Online article "Employers Adjust Health Benefit Strategies in Reform's Wake.")

“The time period for organizations to wait and see has come and gone,” said Julie Stich, research director at the International Foundation. “More employers are looking into the direct costs of implementing the ACA, how it will impact their bottom line and ways to cut costs.”

Survey responses were received from 728 human resource and benefits professionals and other industry experts from organizations representing U.S. employers with fewer than 50 to more than 10,000 employees.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related SHRM Articles:

Time to Get Strategic, HR Magazine, August 2013

PCORI & Reinsurance Fees—Keeping Them StraightSHRM Online Benefits, June 2013

Study: 6.5% Growth in Medical Costs for 2014, SHRM Online Benefits, June 2013

Employer Plans for Health Care Reform Evolving, SHRM Online Benefits, June 2013

Employers Adjust Health Benefit Strategies in Reform's Wake, SHRM Online Benefits, May 2013

Critics Say PPACA May Encourage ‘Part-Time Society,’ SHRM Online Legal Issues, May 2013

Quick Links:

SHRM Online Benefits page

SHRM Online Health Care Reform Resource Page

SHRM Online Wellness Programs Resource Page

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