A large majority (83 percent) of U.S. employers claim they are paying close attention to health care legislation developments, according to new research from benefits provider MetLife. Regardless of company size and whether or not they offer medical benefits, eight in 10 employers say they are on top of the legislation, although other findings in the study suggest more confusion than clarity about how the likely final legislation might affect the health care benefits they provide to their workers.
Uncertain About Next Steps
Three-quarters of employers agree strongly that employees consider health insurance a critical component of a compensation package. Virtually all (96 percent) say promoting a culture of health and wellness for employees is important.
However, many employers (41 percent) aren’t sure what they will do regarding medical benefits should legislation pass, and the findings suggest they might not be fully aware that both the House and Senate bills would establish an expansive set of baseline coverage requirements along with broad-based rules relating to guaranteed issue, premium rating, and prohibitions on pre-existing condition exclusions. For example, the study found that:
• 30 percent of employers that offer medical coverage expect their health benefits to remain unchanged. However, a range of provisions in the House and Senate bills establish plan design mandates that would:
✔ Allow a government task force to identify services that must receive first-dollar coverage.
✔ Set dollar limits on deductibles and consumers' out-of-pocket expenses.
✔ Forbid lifetime limits and pre-existing condition exclusions. (According to an analysis by law firm Mintz Levin, "the bar on lifetime limits may have a profound effect on self-funded plans, since stop-loss carriers may be unwilling to underwrite exposure that is potentially unlimited.")
✔ Require plans to allow dependents up to age 26 or 27 to stay on their parents' health coverage.
✔ Limit waiting periods on new employees' enrollment in their employer's health plan.
✔ Require substantiation of individuals' health savings account (HSA) spending.
✔ Tax the current federal subsidy to employers providing retirees with prescription drug benefits (see Employers, Unions Warn Against Taxing Medicare Drug Subsidy).
Another indication of the legislation's sweep: It's likely to amend the Fair Labor Standards Act (FLSA) to require breastfeeding breaks for nursing mothers.
The new standards and requirements could drive up employers' health care costs, some fear (and as predicted in an analysis by the consultancy PricewaterhouseCoopers), although small businesses that qualify would receive a 25 percent tax credit to help pay for employee coverage under the Senate bill.
Another provision that could raise employer costs is $500 billion in cuts to the Medicare budget, leading health service providers constrained on what they can charge Medicare patients to engage in additional cost-shifting to employer/plan sponsors.
At the same time, however, the Senate bill imposes a 40 percent excise tax on so-called "Cadillac" or high-value benefits costing more than $8,500 for singles and $23,000 for families, expected to initially impact a fifth of all employer-provided plans and snag many more as health care costs rise (see Employers Would Reduce Health Benefits to Avoid Excise Tax). Under the language of the Senate bill, calculation of these aggregate value limits would encompass health, dental and vision coverage, as well as HSAs, health reimbursement arrangements (HRAs) and health flexible spending accounts (FSAs).
• 39 percent of those employers that do not offer medical coverage are not anticipating offering that benefit. However, both the House and Senate bills impose "play or pay" penalties on employers—those with 50 or more employees in the Senate version, and those with annual payrolls of $500,000 or more in the House version—that fail to provide their workers with health care containing minimum "essential benefits."
On the other hand, the relatively low penalty under the Senate bill for not providing coverage ($750 per worker) could, some analysts say, prompt more employers to drop their existing coverage—leaving their workers to purchase subsidized individual policies through the new state health care exchanges.
In addition, 36 percent of employers are unsure about what they will do regarding nonmedical benefits such as life insurance, disability income protection and dental benefits should reform legislation pass, while 44 percent of those that offer these benefits expect that they will make no changes to them. Only 5 percent of employers who offer these benefits say they would consider reducing them.
Communication Counts
“Effective communications for diverse audiences is a critical component for the success of health care reform," advises Ronald Leopold, vice president, U.S. business, at MetLife. “While there is understandably a reason for a wait-and-see approach by employers as the legislation is debated, communicating to employees that their current benefits are not changing in the short term can be surprisingly reassuring.”
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“Communicating to employees that their current
benefits are not changing in the short term
can be surprisingly reassuring.”
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Staying Informed
As for where employers are getting information about health care reform legislation, big companies are more likely to turn to specialized sources:
• 56 percent of all U.S. employers cite traditional media outlets (TV, radio, newspapers and magazines) as preferred sources.
• 57 percent of large employers (500 or more employees) also turn to their benefits brokers or consultants for information, more so than to business media (42 percent), general audience media (37 percent) or industry publications (32 percent).
“We have seen a great appetite for information on health care reform,” says Leopold. “Our study reveals a tremendous opportunity for insurance brokers and benefits consultants to help better educate their clients. In turn, well-informed employers will be better positioned to share with their employees the implications of health care reform on their personal situations.”
Satisfaction Impacts Attitudes
Individuals' satisfaction with their medical benefits affects their attitudes toward health care reform strongly. MetLife found that:
• 62 percent of Americans without any medical insurance feel that health care reform will be “good for America.”
• Only 42 percent of those with medical insurance shared that view.
Age is another factor affecting opinions:
• 65 percent of Gen Y individuals (ages 18 to 35) believe that health care reform will impact them favorably, and only 44 percent are satisfied with their medical insurance.
• On the other hand, while only 34 percent of Baby Boomers (ages 46 to 65) believe that health care reform will have a positive impact on them, 63 percent say they are satisfied with their coverage.
Attitudes toward health care reform correspond to health status:
• 65 percent of consumers who assess their health as fair or poor say that health care reform will have a positive impact on them and their families.
• Only 28 percent of those who say their health is very good or excellent agreed.
Study Methodology
The MetLife Study of Employer/Consumer Attitudes on Health Care Reform surveyed employers and working-age consumers from Nov. 2-22, 2009. In addition, 501 interviews were conducted with benefits decision-makers at companies with 10 or more employees, representing a mix of industries and geographic regions, and 701 interviews were conducted with consumers between the ages of 21 and 65.
Stephen Miller is an online editor/manager for SHRM.
Related Articles/Reports—External:
Employers Brace for Health Bill's Cost, Wall Street Journal, December 2009
Assessing the Impact of Federal Health Care Reform on Employers and Group Health Plans, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C., December 2009
Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage, PricewaterhouseCoopers, October 2009
Related Articles—SHRM:
Reform Could Impact Use of Health Savings Accounts, SHRM Online Benefits Discipline, revised January 2010
Senate's Health Care Legislation Deserves Employers' Attention, SHRM Online Legal Issues, December 2009
Health Reform: Mixed Impact on Retiree Benefits, Study Finds, SHRM Online Benefits Discipline, December 2009
Employers, Unions Warn Against Taxing Medicare Drug Subsidy, SHRM Online Benefits Discipline, December 2009
Employers Would Reduce Health Benefits to Avoid Excise Tax, SHRM Online Benefits Discipline, December 2009
U.S. Employers: 'We'll Pass Along Health Reform Costs,' SHRM Online Benefits Discipline, September 2009
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