Insurance News

Many US Employers Unsure About Impact Of State-based Insurance Exchanges In 2014

Posted on: September 2, 2011

45% of US employers are going to rethink their long-term health care strategy next year, and a significant number are unsure how they will react to the impending impact of state-based insurance Exchanges in 2014, according to a survey carried out by Towers Watson, involving 368 medium-to-large companies.

The authors informed that companies are planning moderate changes in their health care plans for next year. Health care costs for employers are expected to rise by 5.9% in 2012, much lower than the 7.6% rise in 2011. However, 88% of firms plan to take measures to reign in their costs in order to avoid the impact of health care reform’s excise tax.

71% say they will probably carry on offering health care coverage to their active staff through 2014. The rest do not know whether they will carry on, or exit and give the equivalent to employees in salary increases. 54% of companies say they plan to discontinue offering health care benefits for retirees of all ages.

Employers say the main driving force behind their cost shifting and health care design changes is health care reform. 53% are sure that health care reform will be put into practice in time. However, 70% doubt that health insurance Exchanges in 2014-2015 will provide a feasible alternative to company-sponsored health coverage for active employees. 56% of companies actually think they they will be liable for the excise tax by 2018. Over 75% think that health care benefits will carry on being an important component of their overall employee value proposition well after 2014.

Ron Fontanetta, senior health care consulting leader at Towers Watson, said:

    “With so much still unknown regarding both the short- and long-term impact of health care reform, most employers will not make wholesale changes to employer-sponsored health plans in 2012. However, a small group of employers is driving more fundamental change in 2012 by using account-based platform designs, aggressively positioning incentives and rethinking subsidization levels.”

Employers plan the following actions between now and 2014:

    Raise offering of ABHP (account-based health plans). 17% plan to add this plan design in 2013/2014, resulting in 74% of companies offering ABHP
    49% plan to use value-based benefit designs
    58% plan to raise use of preferred networks
    47% plan to significantly lower the health care benefit value of active employees
    57% plan to lower employee health care contributions for lower-paid staff

A Snapshot of Health Care Costs 2012

Annual medical and pharmacy coverage cost (average) per employee for active coverage will be $11,204.

66% of companies will raise employees’ share of premium contributions for single-only coverage for 2012, and 73% will up them for employees with covered dependents.

2012 compared to 2011 – Increase in employee’s share of premium contribution

    Single-only coverage
    Decrease – 1%
    No change – 32%
    Increase of 1 to 5 percentage points – 46%
    Increase of at least 5 percentage points – 20%
    Dependent coverage
    Decrease – 1%
    No change – 26%
    Increase of 1 to 5 percentage points – 44%
    Increase of at least 5 percentage points – 29%

The authors expect companies to be shifting costs well after 2012. The survey indicates that 23% of employers are wondering whether to considerably reduce their subsidies for dependents and spouses. 19% are considering using surcharges and spousal waivers when other coverage is available.

Randall Abbott, senior health care consulting leader at Towers Watson, said:

    “It is clear from our research that employers remain committed to providing employer-sponsored benefits for the foreseeable future. 2012 will ultimately be a defining year – the year some employers head down a path of bold and decisive actions, while others will wait and see. Whether choosing to pay or play, employers will need a strategic view for the future.”

Copyright: Medical News Today

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