Most Firms Plan to Keep Their Health Insurance Plans After 2014

Approximately three-quarters (71 percent)  of mid-sized to large companies plan to retain their health insurance plans in 2012, according to a new Towers Watson survey.  Another 53 percent expect the health reform law, the Patient Protection and Affordable Care Act (ACA), to be fully implemented in January, 2014.  At that time, people will be mandated to buy coverage and employers must provide coverage.  Anyone who fails to follow the mandate face fines.  About 53 percent of employers expect to trigger the health reform excise tax by 2018, meaning they will pay the fine, rather than provide coverage.  The average rate increase for health premiums expected for 2012 is 5.9 percent, a decrease from the 7.6 percent in 2011, according to the 368 business owners surveyed. 

Another 45 percent of respondents plan to rethink their long-term healthcare strategy next year, and many are not certain how they will respond to the impact of state-based insurance exchanges in 2014.  An additional 29 percent are unsure about whether they will continue sponsorship or offset the loss of healthcare benefits if they end employee coverage with an equivalent salary increase.  For retirees, more than half of employers (54 percent) that offer health care benefits plan to discontinue them for both pre-65 and post-65 retirees.  Approximately 70 percent of employers are skeptical that health insurance exchanges, where individuals and small businesses will be able to compare prices, buy coverage and get federal subsidies, will be a viable alternative to employer-sponsored coverage for their employees in 2014 or 2015. 

 Another finding of the Towers Watson survey is that nine percent of the companies recently polled plan to drop employer-sponsored health insurance after the ACA takes effect in 2014.  Other research predicts that even more firms will discontinue coverage, letting employees buy insurance through the online marketplaces, or exchanges, that will be established. 

“There are just a lot of unanswered questions, and a lot of it’s speculation,” said Dale Thoma, managing partner for Willis of Wisconsin, Inc., a subsidiary of global insurance broker Willis Group Holdings.  Clients are asking for help exploring options, including the possibility of dropping coverage in three years.  “Absolutely, people are talking about it,” Thoma said.  “It will probably be the No. 1 topic in our business.”  Dianne Kiehl, executive director of the Business Health Care Group, a coalition of Milwaukee-area employers who work to curb rising costs, said her members are “all kind of still waiting” although some haven’t ruled out dropping coverage.  Thomas R. Sobocinski, Wauwatosa-based national director for healthcare at accounting and advisory firm Baker Tilly, said companies are looking at whether to continue offering health insurance to employees.  “There is serious cost-benefit evaluation as to what employers are going to do 2014 and beyond,” he said. 

A study by Mercer shows different results. Despite reports that employers will cut the healthcare benefits they offer to workers as the ACA goes into effect in 2014, Mercer says that quite the opposite will happen.  According to Mercer, enrollment in health insurance plans offered by employers is on the rise.  The consulting firm surveyed companies and found that the vast majority will continue to provide their workers with health care benefits.  According to Mercer’s survey, only two percent said that they were “very likely” to discontinue offering health benefits.  Rather, they will send employees to state-run health insurance exchanges.  

Current healthcare spending is expected to more than double from 2010 – 2014, according to Health Affairs  The study found that healthcare spending growth in 2010 was estimated to be 3.9 percent.  That level of healthcare spending is expected to grow to 8.3 percent in 2014 when expanded Medicaid and private insurance coverage under the ACA take effect.  Expanded healthcare coverage under the ACA is expected to drive demand for healthcare, particularly for prescription medications and physician/clinical services.  The researchers also expect that the federal government’s share of healthcare spending will grow from 27 percent in 2009 to 31 percent in 2020. 

Dr. Donald Saelinger, former CEO of Patient First Physicians Group and former Vice President with St. Elizabeth Healthcare, and a healthcare consultant, is committed to making the ACA work.|newswell|text|FRONTPAGE|s  According to Saelinger, “One major concern is the ability of the health-care infrastructure to manage the influx of nearly 50 million new patients. An added concern is the absence of any reasonable tort reform, which would eliminate seven percent of the cost of healthcare.  An important challenge to full implementation of the ACA law is the issue of the its constitutionality.  Is it constitutional for United States government to force all Americans to purchase insurance, referred to as the individual mandate?  We must understand that insurance works as a result of the rule of large numbers; it must have healthy people and sick people in the insurance pool, otherwise it does not work.  Furthermore, if we were allowed to buy health insurance only when we get sick, the cost of the insurance would be unaffordable.”

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