Many employers plan to adjust their benefit strategies based on how healthcare reform legislation affects their costs, according to a survey of HR and benefit executives from mid-sized and large organizations.
Business consulting firm Towers Perrin surveyed 433 executives nationwide and discovered that 80 percent of employers are closely monitoring healthcare reform developments in Washington. Most of them said they will not absorb any additional costs resulting from reform and plan to take action to avoid doing so.
Only 11 percent of the surveyed companies would agree to absorb increased healthcare costs by reducing their profits, while the majority of companies said they would respond to higher costs by reducing the benefits their employees receive.
Twenty-three percent of those surveyed are rethinking benefit changes in light of possible reforms, and 89 percent are planning to re-examine their health benefit strategies for active employees.
Proposed cost-cutting strategies mentioned by employers include reducing benefits, raising prices for customers and layoffs.
Ninety percent of HR and benefit executives listed cost containment as the most important healthcare reform goal.
A majority of surveyed employers (61 percent) said they would stand by their commitment to employee wellness and health promotion programs, even if they no longer offered medical benefits under the "pay" option of a pay-or-play mandate, for example.
However, nearly half of employers (47 percent) think a "pay or play" mandate would have a negative impact on their business.
The surveyed employers expect to respond to a pay-or-play mandate in the following ways:
- 37 percent would provide company-sponsored health coverage that substantially exceeds the standard.
- 29 percent would discontinue company-sponsored health coverage and pay the assessment – if the per-employee cost were substantially lower.
- 26 percent would provide company-sponsored health coverage at the level of the minimum required standard.
Executives from industries with low margins and lower-income, high-turnover employee populations said they would write a check to the government and have employees purchase coverage in a reformed health insurance market.
For instance, 42 percent of retail respondents said they would close their plans and pay a federal assessment, while 28 percent of those in financial services would choose "pay" over "play" and 24 percent of those in technology and telecommunications would opt out of employee coverage.
Towers Perrin's survey also examined the experience of employers based in Massachusetts, where a pay-or-play mandate on employers and a coverage mandate on individuals similar to those currently proposed in Congress have been imposed.
Among those employers, most respondents have seen little or no change in employee or employer healthcare costs or access to quality care, although more than two-thirds report that their administrative burdens have increased.
Nevertheless, there was some support for healthcare reform proposals. Fifty-three percent of employers believe that comparative effectiveness research would have a positive impact by influencing the quality of care, and 44 percent believe that reforming the health insurance market to ensure guaranteed access to coverage, regardless of health status, will have a positive impact.