Although many tea-leaf readers predicted that health care reform would spur employers to drop health benefits, a new poll of nearly 3,700 executives by Crain Communications shows such forecasts may have been based more on fear than fact.
Granted, the full force of reform’s impact has yet to be felt by employers – and won’t for several more years. We all know the stats: The Patient Protection and Affordable Care Act puts employers with more than 50 employees on the hook for a $2,000 per employee-per year fine, starting in 2014.
Still, Crain found that 52.5% of employers strongly disagreed that it would be better for their organizations to stop offering health care benefits and pay a fine under the new law.
Another 15.3% somewhat disagreed with the notion of dropping coverage and paying the fine. Eighteen percent somewhat agreed with the idea of dropping coverage; 14.1% strongly believe their organizations would be better off in dropping benefits.
Among employers with 25,000 or more workers, 64.9% strongly disagreed that their organizations would be better off dropping health care benefits. Another 12.4% somewhat disagreed; 14.2% somewhat agreed and 8.4% strongly agreed.
Crain also finds that you pros still are a bit fuzzy on understanding PPACA – but who could blame you?
Among survey respondents with benefits decision-making responsibility, about 18% strongly agreed they understood the impact of the law, while 37.3% somewhat or strongly disagreed. More than half (51.3%) of benefits decisionmakers say they strongly disagree it would be better for their organizations to drop benefits, while about 18.5% somewhat agreed it would be better, and 14.8% strongly agreed, Crain reports.
Lastly, 65.7% of respondents strongly agreed that they would continue offering health care benefits because they are critical to employee recruiting and retention.
So, was employer opposition to reform real or imagined? Was the idea of reform more unsettling than the reality? Do you agree or disagree with Crain’s findings? Share your thoughts in the comments.
Already Registered?
If you have already registered to Employee Benefit Views, please use the form below to login. When completed you will immediately be directed to post a comment.
Not Registered?
You must be registered to post a comment. Click here to register.
16 Comment(s)
Posted by: Dan W | June 14, 2011 2:08 PM
Does it make any sense to link the basis for "other surveys" to an article that came out 14 months ago, just after PPACA was announced?
Report this Comment
Posted by: Jeffroiw | May 7, 2010 11:32 AM
I think the majority of you are seemingly forgetting the fact that Healthcare benefits are extremely important to employees.
The cost of not offering these benefits to employees would cost employers more as they would likely lose skilled employees to employers that do provide benefits. Also, the theoretical savings of not offering benefits would be offset by employees demand for more salary.
Report this Comment
Posted by: Unknown | April 19, 2010 12:47 PM
It is hard to know the real value of any survey. So much depends on how the questions are framed. However, I recently attended a seminar on health reform where the majority of participants were "small" business owners. It was clear that many were thinking of dropping coverage. AS AGCJK noted in his/her comment, when an employer weighs all the costs and all the issues, the penalty could easily become the easier as well as the cheaper way to go.
Report this Comment
Posted by: SGeri | April 15, 2010 3:37 PM
we have a national base employer employee benefit insured, to date, of the new or prospective accounts, all have said, "...they will buy some benefit program".. I cannot deny that many will buy limited employee benefit programs and wait for carriers to modify the program to the new law. still no coverage for 1,000,000 employee's to a program costing $ 117 a month per eo, is a substancial increase in cost to budget; but cheaper then the fines.
Report this Comment
Posted by: Jim Ricker | April 15, 2010 7:00 AM
This poll is a good snapshot of today's thought process on what the future may hold among larger employers. Larger employers have the resources to be more flexible and absorb some costs and make adjustments whereas the under-100 and under-50 segment does not have this flexibility. This conversation will be more interesting and useful in 2014 & 2015 when the law is implemented more fully and the effects are realized.
Report this Comment
Posted by: AGCJK | April 14, 2010 5:58 PM
This survey is of little value at this time. I believe that when small- to mid-size employers weigh the cost and adminsitrative resources required to -
(i) perform new reporting and disclosure obligations, (ii) satisfy the health care plan qualifification process, (iii)administer automatic enrollment opt outs,and (iv) calculate and communicate exchange subsidies and vouchers,
- many will find it cheaper to pay the penalty and add some additonal compensation to paychecks for the benfit takeaway.
This before I even think about the additonal cost of providing benefits to many part-time and seasonal employees who are not currently benefit eligible but could easliy become so when HHS gets around to issuing definitions that will go into my 4 page 12 point font summary.
Report this Comment
Posted by: Brenda2 | April 14, 2010 5:22 PM
The majority of businesses in this country are small businesses, many are under 50 employees. Let's see how small businesses will reply to the survey. This comment is an extension of what "Unknown" Broker in Colorado stated. I am a broker in California and I think many of my clients with 50 or fewer employees will drop the coverage. Small bussinesses are struggling and if they can find an out they will take it. Or should I say they will choose the lesser of two evils! I am also waiting to see how this legislation is going to reduce healthcare costs.
Report this Comment
Posted by: Unknown | April 14, 2010 4:20 PM
As a broker in Colorado, I have spoken with 2 small employers, and both are strongly considering canceling group health coverage. The $2,000 tax applies to employers with 50 or more employees. Over 85% of employers in Colorado have 15 or fewer full-time employees, so there aren't any penalties that affect these groups.
This survey didn't give this demographic group real consideration.
For Larger groups (50+ employees), the employee only monthly rate runs between $350-$400 per monthly on a fully-insured basis. Even at $350 per month, or $4,200 per year, a penalty of $2,000 is a deal!
Report this Comment
Posted by: Kelly P | April 14, 2010 3:41 PM
Fall2009 posted the possibility of employers excluding spouse and children coverage from their plans. Is that a possibility? I have not read anything that says employers are or are not allowed to provide employee only coverage. Does anyone know?
Report this Comment
Posted by: kenk | April 14, 2010 2:55 PM
Penalties are predictable, healthcare costs are not. It is easy to say that you will not drop healthcare benefits at this time. As the reality draws closer the actual action may differ significantly if a number of large employers decide to opt for "predictable".
Report this Comment
Posted by: formerdem | April 14, 2010 2:51 PM
I belive the final answer will be in a few years. Once owners see the impact of all the new taxes, I would say they drop paying health insurance, pay the fine and pocket the difference. Stockholders will see the same impact. Drop paying for health benefits, pay the fine and give the savings to the stockholders...
Report this Comment
Posted by: Thomas H | April 14, 2010 2:46 PM
This isn't the first time I have read an article here where the conclusion is not based on the facts reported. 18% somewhat agreed they may drop coverage and another 14.1% (total of 32.1%)strongly agreed their organizations would be better off dropping benefits. The author concludes the "tea readers" were wrong? If half the 32.1% above did drop coverage, it would be a terrible outcome for a bill with the express intent of moving towards universal coverage.
Report this Comment
Posted by: Worried in the Midwest | April 14, 2010 2:42 PM
Surveys like this are of NO VALUE. These execs are giving an opinion without any facts at this point. It would be more appropriate to ask if they had any desire to keep their benefit plans.
When the costs are clear, then decisions can be made. Right now all we are talking is "what if"
Report this Comment
Posted by: Carroll L | April 14, 2010 2:37 PM
You can read in more depth about the survey at Workforce.com or Businessinsurance.com, the two Crain publications that created and conducted the survey.
Report this Comment
Posted by: Fall2009 | April 14, 2010 2:26 PM
The penalities are still less than the actual cost of administering a health plan for many employers over 200 employees. It will be interesting to see if employers pay the penalty and just increase employees salaries to help them find private coverage. Of if employers exclude spouse coverage under their plans, but maybe keep employees and children coverage.
Report this Comment
Posted by: James S | April 14, 2010 2:07 PM
So everything will still be ok if more than 15% of those providing health insurance for their employees end up dropping coverage? How could anyone possibly spin this as good news?
The results of this survey would only be comforting if <5% would entertain the idea at all!
Report this Comment
Add Your Comments...