According to recent survey of benefits professionals at 661 large U.S. companies, most employers say they will continue to offer health coverage rather than pay the penalty established under the Patient Protection and Affordable Care Act (PPACA), but underestimate the impact the 40 % excise tax will have on their health plans. The study, The Impact of Health Care Reform on Employers, (pdf) was conducted in May 2010 by the business consulting firm Towers Watson. The purpose of the survey was to get an idea of how employers are responding to various health care reform challenges “that have far-reaching implications for retention, recruitment, productivity, workforce planning, change management and every aspect of the evolving employer-employee deal.”

According to a press release, key findings of the study include the following:

• Most employers anticipate that health care reform will increase their organization’s health benefit costs. Most say they plan to pass on the increase to employees (88%) or reduce health benefits and programs (74%). The majority (82%) of employers surveyed, however, remain committed to their leadership role in creating a culture of health by providing workforce health improvement/wellness initiatives.
• Most employers intend to continue offering health insurance coverage instead of paying a penalty. Specifically, starting in 2014 when large employers must offer minimal essential coverage to full-time employees or pay a penalty, 88% of surveyed employers are either definitely, or likely, to continue to provide health benefit coverage.
• More employers could be unwittingly subject to the 40% excise tax on high-premium “Cadillac” plans. Towers Watson estimates that the excise tax will affect more than 60% of employers when it becomes effective in 2018, with many more to follow soon after. Only 46% of the employers surveyed, however, believe they will be subject to this tax.
• More than three in four employers (85%) believe that health care reform will reduce the number of large organizations offering employer-sponsored retiree medical benefits. The survey also found that 43% of employers that currently offer retiree medical plans plan to reduce or eliminate them.
• Fifty-eight percent of employers surveyed believe health care reform will drive large employers to adopt total replacement consumer-driven health plans (CDHP) for their active employees.

This entry was written by Ilyse Schuman.

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