What Do Employers Really Want with the ACA?

In spring of this year the International Foundation of Employee Benefit Plans surveyed employers about the Affordable Care Act (aka Obamacare). Respondents included a wide range of employers, from under 50 to 10,000 employees.

Interestingly, when asked if they would favor repeal of the legislation, only 35% of the 445 employers were in favor of repeal. Of the rest 44% were opposed to repeal and 20% were undecided.

Most employers (97%) said they would continue to provide health care coverage for full time employees with the reason being to attract and retain good employees.

The provisions that employers would most want to continue are: Elimination of exclusions for pre-existing conditions, Coverage for adult children to age 26, 100% coverage for preventive care and allowing increased incentives for wellness. Employers believed that these provision are very important to their employees as well.

Employers felt that the ACA would continue to raise their costs at a rate of about 4-6%. This would be in addition to “trending” or the increasing costs of actual health care services.

What is most interesting in this survey is the fact that while repeal is not the preference, many feel that the ACA has impacted them negatively. The major negative impact is in reporting and compliance.

Only 2.5% said they were reducing hiring to stay under the 50 employee threshold that would require benefits to be offered but 10.6% said they adjusted hours so that fewer employees would qualify.

In reviewing these results and comparing to my own experience with clients, I would say that the results are consistent. There are definitely provisions of the ACA that are positive and when explained properly to an employer, they understand and appreciate them.

The greatest impact has actually been on the groups of under 100 employees. Certainly those at the 50 threshold experienced a big cost increase when adding benefits and it was a bit of a new world. Those that already had coverage, but had to migrate to an age rated format had some of the biggest challenges.

With my clients, I have found that they simply don’t want to have any more changes. They are fatigued by all the new reporting obligations and plan provisions. Only a very few cancelled their group plans in favor of sending the employees to the Exchange. They recognized that the new individual market provides inferior access to providers and therefore wanted to continue to provide quality benefits for the employees. Most of those that dropped coverage were typically those with very low paid employees that had a great deal of turnover.

One very real issue for larger employers is the Cadillac Tax. Fortunately, this provision is postponed until 2020. I confess to finding this rather amusing. On the one hand the law works to insure everyone, yet if the value of the benefits is too high, the employer is penalized. I understand that it is an attempt to reign in health care costs, but it really comes off as incongruous.

With the Cadillac tax an employer is subject to a non-deductible excise tax on “high cost” health plans. They are defined as any health related coverage in which the combined employer-employee premiums exceed $10,200 for single coverage or $27,500 for family coverage.

Many employees would be shocked to see the price the employer is actually paying for their benefits. These thresholds are simply not that high for a relatively rich benefit package ($100-750 deductible plans). So this is a real issue for employers. Many are looking at much higher deductibles and HSA (Health Savings Account) Eligible plans to offset this risk. But they are also in a “wait and see” mode again, since there is just no telling what the next elections will bring.

More than half of those surveyed are expecting another major health care bill after the election. Of course, that all depends on the results of the elections. The currently futile attempts at repeal have simply been a political game that has cost the taxpayers millions of dollars in order to do some grandstanding to the political base.

As an insurance broker/consultant for almost four decades, there is one thing I can say has pleased me about the last few years. Finally people are talking about our system and they actually seem to be interested in understanding how it works. Employers see the value of working with someone who understand the system and can provide them the guidance they need. Eyes may glaze over when chatting at a party, if we dive too deep into the details, but there is clearly a curiosity that simply did not exist 10 years ago.

Margaret R. Beck
Margaret Beck  CLU, ChFC, CEBS started her insurance practice in Redding in 1978. As an insurance broker/consultant,  she represents businesses and individuals as their advocate.  She assists in choosing proper products, compliance with complex benefit laws and claims issues once coverage is placed. All information in her column is provided to the best of her knowledge, subject to final regulation by the respective agencies. Questions to be answered in this column can be submitted to info@insuranceredding.com. Beck's column is also published in the Redding Record Searchlight.
Comment Policy: We welcome your comments, with some caveats: Please keep your comments positive and civilized. If your comment is critical, please make it constructive. If your comment is rude, we will delete it. If you are constantly negative or a general pest, troll, or hater, we will ban you from the site forever. The definition of terms is left solely up to us. Comments are disabled on articles older than 90 days. Thank you. Carry on.

2 Responses

  1. Margaret gives a fair opinion of the ACA.  While it is being phased in most employers do not suffer the big shock the GOP promised would happen.  The same GOP folks want to change the ACA to something else, but have not laid out their plan.  speaker of the House Ryan’s plan does not kill the ACA, but it hurts those 20 million who have been helped by the ACA.  since the ACA is the Law of the land,  trump  or other rightwing radicals will have a hard road to hoe to kill it as they all promise.  Expect the ACA to get even better and provide a sustainable and acceptable healthcare program in the USA.

  2. cheyenne says:

    How anyone can say the ACA is a success is beyond me.  Maybe in California but not elsewhere.  Win Health here in Wyoming, one of the ACA providers went bankrupt because the ACA only paid 12% of the money it promised and the state had to take over the plans to keep those people insured.  Now only Blue Cross offers ACA and costs are predicted to rise 10% again this year.  This is happening in other smaller states as all those insurance companies created to lower costs through competitiveness are going bankrupt because they are not making money, too many unhealthy people signing up and not enough healthy people..

    In Colorado the lower payments have caused many doctors to leave and now the ERs are overrun because of the lack of doctors.  My doctor in Fort Collins quit and I was told it would be seven months until I could get a new one even though I am not on ACA welfare subsidies.  My health provider in Colorado was UCHealth.  I went to the UCHealth clinic here in Cheyenne and was given a new doctor in two weeks.  Same health care provider, different states.

    In Prescott, Arizona the ACA provider has suspended payments to sober living houses because of fraud.  Apparently, with a practice that started in California according to The Prescott Courier, ACA advocates went out and signed up the homeless on the ACA.  Once signed up they could not be refused insurance because of drug and alcohol addiction and then these advocates were paid a finders fee by the sober homes in Prescott.  When the insurance ran out these past homeless were kicked out for lack of payment and were homeless again.

    The ACA is not working the way the Democrats said it would.

Leave a Reply

Your email address will not be published. Required fields are marked *