Employers Reluctant to Shift Healthcare Costs to Workers, but Expect Others to Do So

Most employers say they do not plan to shift healthcare costs to employees in response to the healthcare-reform law, but they hold far different views when it comes to what they expect their competitors to do, according to a recent survey. 

In it's 2012-1013 Healthcare Reform Survey, insurance-broker Willis says 55 percent of employers believe competitors will at some point shift costs to employees as a way of dealing with additional expenses related to the healthcare-reform law. But the survey notes that only 34 percent of employers say that they might take this same action. 

Willis says, “Employers are overwhelmingly predicting that similar employers will raise employee contributions, and this year's survey responses indicate that employers are more likely to pass on costs for not only employee coverage, but also employee-paid dependent coverage.”

However, with a far smaller percentage of employers indicating that they plan to shift costs themselves, Willis wonders if employers have a true grasp of the costs associated with the law. 

“While 60 percent of employers state that avoiding healthcare-reform-cost increases is very important to their businesses, in Willis' view, employers are relying upon inaccurate 'perceptions of cost' as they plan their responses to healthcare reform,” the broker says. 

Moreover, Willis says that over half of respondents have yet to determine the cost of healthcare-reform compliance.

“However,” the broker adds, “among the employers who have calculated, or are in the process of calculating, the cost, 61 percent indicate that the total impact of all healthcare-reform changes has increased costs, with 17 percent of responding employers noting that costs have increased by over 5 percent.” Willis adds that survey responses do not show the reforms decreasing employer costs. 

The survey also notes employer uncertainty surrounding the state-based healthcare exchanges as well. While the 2014 exchange-enrollment period is approaching, Willis says two-thirds of respondents doubt the exchanges will be ready to accept enrollees on time. 

Willis says 20 percent of employers expect competitors to terminate group-health plans to encourage migration to the exchanges, and 30 percent expect employees of other companies to be encouraged to join the exchanges. “This paints a rather dismal picture of employer sponsorship of group-health benefits.”

But again, Willis notes differences in what the employers plan for their own companies when it comes to benefits and rewards. “Primarily, employers say they expect to maintain their plans,” says Willis, adding that employers say they are more likely to expand health coverage as needed without reducing salaries, vacations and bonuses. 

“Taken as a whole, it appears that employers expect that similar employers may take more radical action than they themselves anticipate taking,” Willis concludes.

However, Willis also says the responses with respect to maintaining plans while not adjusting other rewards may stem from many employers assuming that healthcare reform will generally not affect their costs.

“Employers are still coming to terms with the impact of healthcare reform, and many employers still seem to function in a 'shock mode,'” says Jay Kirschbaum, practice leader, National Legal and Research Group, Willis Human Capital Practice, in a statement. 

He adds, “The survey suggests that employers continue to recognize the value of providing medical benefits, how important those benefits are to their employees, and that providing benefits allows them to attract and retain the employees they need. Therefore, they generally plan to continue offering competitive medical benefits. However, they are considering several potential options, even including the possibility of coverage through state exchanges.”

The survey, conducted between Nov. 8 and Nov. 30, 2012, polled more than 1,200 employers with varying benefit plans. Over a third of respondents have 100 and 499 employees, and a little over 11 percent represent employers with more than 2,500 employees.