Previous studies have showed both private and public sector employers remain concerned regarding changes brought about by the Obama administration's healthcare reform act, and a new study shows more employers are considering dropping their group health insurance once some of its parameters take effect.
The Patient Protection and Affordable Care Act will unleash a number of new regulations and requirements upon organizations offering employer-sponsored health insurance, but a report shows some employers remain focused on a particular aspect of that law. The act mandates states develop virtual marketplaces for individual health insurance plans or allow the federal government to make one for them by 2014. That requirement could allow many employer groups the flexibility to drop their insurance benefits, something 18.8 percent of respondents said they would do, according to a survey by consultant firm Lockton.
"The survey confirmed what we have been hearing anecdotally from our clients for months: that they are very apprehensive about the reform law's mandates. Employers know they have a lot of extra work and expense ahead of them," said Edward Fensholt, director of Lockton's Compliance Services Division.
The survey also showed 80 percent of respondents were either concerned or very concerned with the additional administrative workload the reform plan may require. Local government employers were the most distressed, said the report, with 86 percent of those groups expressing their wariness.
Just over 70 percent worried over the financial impact of the "pay or play" mandate, which could require many to expand health insurance coverage or make some full-time employees part-time to avoid penalties. Six-three percent expressed their apprehension regarding the cost impact of benefit mandates that took affect last year, while 54 percent said they were worried about the $2,500 cap on health flexible spending account benefits, which begins in 2013.
"For many employers, as they become more aware of the law's requirements and costs, the level of concern is escalating. We saw that in the survey results," said Mike Brewer, president of Lockton.
At the same time, the survey showed some respondents recognized certain benefits to reform. Employers were pleased there were measures to incentivize a more consumer-driven approach to healthcare and also added they applaud measures that encourage better preventative care and healthier habits among workers. Some were glad the health insurance exchanges could provide part-time workers will some level of health insurance along with providing pre-retirees a coverage alternative that will save employers money on benefits. The simple elimination of group health insurance offerings becomes more likely given the exchanges, said the report.
Under the law, employers with at least 50 full-time workers will be required to offer those employees health insurance. Those who decide to drop group coverage in 2014 will be required to pay a penalty to the insurance exchange in their state. There are concerns over the official definition of a full-time employee, especially among employers who only have full-time workers during certain times of the year. While 18.8 percent said they plan to simply drop coverage in 2014, most say they'll wait and see what happens first. If the percentage who choose to eliminate health insurance benefits grows, the federal government could be on the hook for significantly more money for federally subsidized health insurance, said the report.
Private and public employers continue to seek reprieve from some portions of the healthcare law in the form of federal waivers, though that option may soon be gone. Reports say the Obama administration won't take new waiver applications after September 22, though the 1,433 one-year waivers that were already granted could be extended through 2013 if applicants submit proper paperwork.
