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.
