Will Continue To In The Future?
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Will Continue To In The Future?
Archie Mathys is an insurance research writer on current events affecting American life. He studies investments, productivity, personal finance & the Wall St. news updates.
US employers’ inability to regulate health care fees and uncertainty about the effects of federal health care reform have many companies rethinking their commitment to providing health care benefits, a survey concludes.
About 43% of employers answering the National Business Group on Health and Towers Watson & Co. survey say they have lost faith in their ability to provide health care benefits to their employees in 10 years, up from 38% in 2009 and 27% in 2008.
Historically, there is a correlation between health care cost trends and the level of confidence of employers in their confidence to continue to providing health benefits.
In the past few years, health care cost trends had been running around 6% a year. This piling on effect of these costs increases plus the current vague direction about regulation from Washington, both its direct and indirect impact, has employers worried that their costs could grow even further.
If health reform legislation includes further taxation on employer-provided health care benefits with a value that exceeds a certain threshold, employers would have the added expense of performing financial calculations.
In addition, if there’s a mandate, they may have to account for employees who don’t enroll in employer plans but instead choose to buy coverage through an exchange.
Most likely there will be additional communications explaining to employees what their options are, which will add to employers’ administration costs too.
Furthermore, a separate survey of employers found that a significant majority believe health care reform, if enacted, would lead to higher costs for employer-sponsored benefit programs and health care services overall.
According to Helen Darling, president of the Washington-based NBGH, said employers’ fading confidence in their ability to continue providing affordable health benefits to employees in the future is partly a reflection of the uncertainty of the world we live in.
Ray Brusca, VP of benefits at Black & Decker, said in an email he believes most employers still will provide health benefits 10 years from now, regardless of cost increases or health reform.
“While I can understand that fewer employers are feeling confident that there will be employer-based health insurance system 10 years from now, the drop is not significant and likely can be attributed to a small number of employers feeling overwhelmed by the cost of coverage as well as some employers favoring a government-run system where employers do not play the same role as today,” Mr. Brusca said in the e-mail.
According to Michael Vittoria, Director of HR at Sperian Protection USA Inc., and president of the Rhode Island Business Group on Health said, “The deterioration in employer confidence levels reported by the survey mirrors a trend that we are seeing in the Rhode Island market. Over the past year, there has been some reduction in the number of employers offering health insurance in the private market, as well as a reduction in the number of employees choosing to enroll in coverage when it is offered by their employer.”
Mr. Vittoria credits this to two factors: Small to medium employers are finding it more difficult to absorb double-digit increases in annual insurance premiums and are more likely to drop coverage entirely, and larger companies are passing more of these cost increases along to their employees.
Although we still see that the private employer-funded health insurance system will continue to be the primary way that most working Americans obtain health insurance in the future, the current health care system needs to undergo a significant overhaul in order to stay viable.
The NBGH/Towers Watson Employer Survey on Purchasing Value in Health Care, conducted between November and January, included responses from 507 employers that collectively employ 11.5 million workers.
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