Forty years after the creation of a national regulatory framework for workplace benefits at large employers, employee health benefits are in the midst of another evolution.
On September 2, 1974, President Gerald Ford signed into law the Employee Retirement Income Security Act, an attempt to give large employers predictability in benefit rules while also protecting workers.
Though prompted by upheaval in worker pensions and in large part focused on retirement benefits, ERISA set operating rules for large group health plans -- what was then and remains, for the time being, the largest book of business for many health insurers.
Amended by Congress and litigated many times since 1974, ERISA has undergone various changes, most recently under the Affordable Care Act. Between health reform and economic trends, the future of employer-sponsored health insurance remains much in flux.
Though still a valuable and tax-exempt part of employee compensation, healthcare costs have become such a burden that corporations like Trader Joes and Target are ending coverage for part-time workers and others are turning private exchanges or direct contracting with providers for full-time staff.
If the employer mandate, the "play or pay" provision, were repealed (and the idea has bipartisan support), more companies could scale back their group plans, letting workers opt out and take a higher paycheck or even stop offering plans altogether.
For now, employer-sponsored insurance is continuing in various forms, with ERISA-governed self-funding being one growing area. But some employers are still struggling to adapt to ACA changes or even just interpret them.
"When the ACA rules were first being released, my clients often expressed disbelief when I would tell them what the rules were," said Chris Rylands, a benefits attorney with Bryan Cave LLP. "That has largely settled down and employers are now looking mostly at how to comply."
Adapting to change
Among the biggest health reform hassles for employers are new reporting requirements on staff hours and availability of affordable covers, and large employers seem poised to do alright. "Smaller employers," Ryland said, "will be more impacted by those requirements since it may require implementing more advanced processes than they currently have."
For both large and small, though, "I do not think we will really know whether the reporting requirements work -- and whether the IRS system can handle all the information properly -- until the IRS starts sending letters assessing play or pay penalties."
On the question of whether employers will start ending their group health benefits, Rylands doesn't see a lot of radical changes coming, though he does think more are going to use novel benefits aimed at controlling overall healthcare costs.
"In my experience, larger employers are continuing to offer benefits pretty much as they have for their employees," he said. "I'm starting to see employers taking a look at telemedicine or engaging on-site medical providers as ways of giving employees access to care that are not as disruptive to their work schedules and lives. Of course, offering those services takes a little bit of thought and analysis since they do not fit neatly into the existing ERISA framework."
Among those are private exchanges, a potential way for insurers to increase their value proposition to employers.
Private exchanges are experiencing what analysts at the consulting firm Accenture are calling "hypergrowth." By some estimates as many as 3 million Americans are already enrolled in plans through private exchanges, a number that could exceed 10 million in the next two years.
The challenge for insurers in private exchanges -- and group health benefits in general -- is to reduce the growth of overall healthcare costs by helping employees be well and access affordable healthcare, "rather than simply shifting costs from employers to employees," as Moody's analyst Bruce Ballentine argued in a recent report.