Most employers signal they will keep offering health insurance
■ Beginning in 2014, companies can move workers to health insurance exchanges, but a recent survey shows that few plan to do so.
In the first few years after the Affordable Care Act is in full effect, physicians are unlikely to see many of their patients’ insurance status change as a result of employers dropping coverage in favor of employees buying individually through health insurance exchanges. Instead, those employed, insured patients will continue to be more responsible for the cost of their care.
Those conclusions came from a report issued by Towers Watson, a global human resources consulting firm. On behalf of the National Business Group on Health, Towers Watson surveyed 440 companies representing 6.6 million employees. The survey was conducted in July and released Aug. 27.
A month after the U.S. Supreme Court had affirmed the constitutionality of the Affordable Care Act, 88% of employers told Towers Watson they had no plans to terminate their health care plans for those working 30 hours or more a week — up from 71% in 2011. Also, 77% of companies said health care benefits were central to rewarding and retaining employees, and 72% said they were not confident — with only 4% saying they were very confident — that health insurance exchanges would provide a viable alternative to employer-sponsored benefits.
Under the ACA, companies that move their insured employees to exchanges, which are designed to provide people with a choice of individual coverage, in 2014 would pay up to a $2,000-per-employee penalty after the first 30 employees if at least one worker receives federal subsidies for the coverage. The exchanges are scheduled to begin in 2014, and the penalty would rise in future years. The Congressional Budget Office has predicted that about 7% of workers in 2014, the year exchanges go into effect, would lose employer-sponsored coverage and buy it from exchanges.
In theory, employers could stop offering coverage now with no penalty at all. Towers Watson, though, said companies don’t consider dropping coverage as a good human relations move. “Affordable health care remains a top priority for employers and a key component in the employee value proposition,” said Randall Abbott, senior health care consulting leader at Towers Watson.
What companies are doing instead, according to the survey, is continuing to review the coverage they offer to see where they can save money, including by increasing employee contributions as part of a strategy that equates more spending on their part as an incentive to improve their health.
The percentage of employers offering consumer-directed health plans — a high-deductible plan eligible to be paired with a health savings account or health reimbursement arrangement — will increase to 61% in 2013 from 59% in 2012. But the big jump comes after the ACA is in place, with 80% of employers expecting to offer it by 2015. About 57% of employees will see an increase of one or more percentage points in their contribution in 2013, down from 66% in 2012, but still considered a reflection of companies’ desire to offload some costs onto their workers.
“Due to the increased costs of medical benefits and the additional burden of compliance, business leaders need to keep the pressure on to control costs, increase work force accountability and engage workers to lead a healthier lifestyle,” Abbott said.
Overall, health insurance spending per employee is expected to be $11,507 in 2013, of which employees will pay $2,596. The overall total is up 5.3% for 2013, a decline from 5.9% for 2012.
Other strategies companies are using to cut health insurance costs include discontinuing plans for retirees, with 28% saying it is very likely they would do so, up from 20% in 2011. Also, companies are looking at changing their plans to avoid paying a 40% excise tax beginning in 2018 for any plan with an aggregate value of more than $10,200 in individual coverage and $27,500 for family coverage.