Employers Optimistic About Health Plan Coverage

healthcare reformMy Comments: I make no apologies for my endorsement of the PPACA legislation (ObamaCare). I strongly believe it’s in our best interest as a nation for ALL OF US to be as healthy as possible, for as long as possible. While the cost of transitioning from what we had before may be hard to stomach from time to time, there is a net positive for all Americans to have access to contemporary medicine.

A friend recently sent me a list of 32 nations that already have universal health care coverage. We are not on this list, nor are countries like Brazil and Argentina. Some are really not significant or well populated in the global arena. But consider that Germany, the economic engine of Europe, has had universal health care coverage since 1941. At the time, “universal” meant only those with an Aryan history. But in the post WWII era until today, one cannot claim that national health care coverage limited the economic opportunities for Germans.

There are going to be some changes in the rules for us. Some will be good and some maybe not so good. It’s part of the effort to limit unintended consequences and improve things. But I don’t see it all going away; no one on the right has ever offered a viable alternative.

By Michael Giardina / November 20, 2014

A majority of employers – regardless of workforce size – are planning to keep their health plan coverage going into next year as the Affordable Care Act’s employer mandate takes effect.

In 2015, employer shared responsibility rules become a reality for employers with 100 or more full-time or full-time equivalent employees – for those in the 50-99 employee cohort the rules take effect in 2016. Despite the additional compliance headaches associated with the employer mandate, organizations appear committed to sponsoring health plans for their workers, in part because they view health care benefits as a valuable tool in recruiting and retaining employees, says Andrew Mariotti, a senior researcher at the Society for Human Resource Management.

“It appears that health care benefits are still considered very important by our members for both attracting and retaining prospective employees and current employees,” Mariotti says.

Just 1% of the more than 3,300 HR professionals surveyed in a new study say they are planning to cut health coverage to their employees, according to the Health Benefits Survey from SHRM’s Benchmarking Research and the Employee Benefit Research Institute. For employers with less than 50 employees – the group that has long been rumored to possibly drop coverage when the employer mandate takes effect – Mariotti says just 2.2% plan to stop coverage.

“More of the smaller employers were considering eliminating coverage, but it was still a very low number,” Mariotti explains.

Meanwhile, Mercer finds that the number of employers considering dropping coverage and sending employees to the public health insurance exchanges has reached record lows, at least according to the more than 2,500 employers who participated in Mercer’s National Survey of Employer-Sponsored Health Plans.

Approximately 4.4% of large employers say they will cease offering employees coverage over the next five years, down from the 6% prediction offered in 2013. Also, just 16% of small employers, those in the 50-199 employee range, plan to drop their plans, a drop from last year’s 23%. Lower health care cost trends are a factor in employers’ decisions to keep offering health care benefits, says Beth director of employer research for health and benefits at Mercer.

“If we weren’t seeing this continuing kind of low cost trend, then we might be seeing a different kind of response to the question,” she says. “But I think because employers feel like they have some tools to manage costs, it’s easier for them to picture continuing to offer their benefits programs into the future.”

Another major contributor to this year’s employer confidence in health plan coverage is the rise in high-deductible health plans and resulting increased consumerism among employees. Umland notes that “the consumer-directed health plan is not just a little cheaper – it’s 20% less expensive than the most common plan, the PPO.”

According to Mercer, nearly half of large employers and 72% of jumbo employers added a CDHP to their health plan offering in 2014. Also, CDHP enrollment numbers have jumped to 23% during this time period, surpassing HMO signups. Meanwhile, PPOs fell to 61%.

“These plans [CDHPs] have far surpassed HMOs in enrollment – they are really becoming a pretty dominant health plan type,” Umland says.

Another reason employers are maintaining health benefits is the value these plans can bring to workforce perceptions and company budgets. “If you don’t offer health benefits, not only are you subject to the [ACA] penalty, but then you have to face employees. Very few employers are willing to say: ‘If we just don’t offer you coverage and you have to go buy it yourself, essentially you are getting a huge pay cut because money that would otherwise to available to you to spend, you’ve got to invest in health care,’” says Umland.

Employees will figure out that the “math just doesn’t work” when cutting benefits because increasing compensation “doesn’t have the same tax exclusions that you get with money that’s spent on health benefits,” says Umland.

All roads lead to the ACA’s excise tax in 2018 – a 40% tax on employers that provide high-cost health benefits to their employees. In the benefit industry’s canvassing by SHRM and EBRI, 85% of respondents do not expect their organization to hit the tax in 2018. In Mercer’s sample, estimates are that a third of employers could trigger the tax if they take no action and maintain current plan structures.