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Life Health > Health Insurance > Health Insurance

Employers Say 'No' To Extra Costs

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Many employers say they will not absorb any additional costs resulting from Federal health care reform, according to a new survey.

The survey sampled views of 433 human resource and benefit executives from midsize and large U.S. organizations. It was conducted by Towers Perrin, Stamford, Conn., in July.

To avoid absorbing additional costs resulting from reform, employers say they would cut back on benefits, raise prices for customers or reduce head count.

The survey also found 89% plan to reexamine their health benefit strategies for active employees in response to the passage of health care reform legislation. (At the time of the survey, 94% of employees at the surveyed companies were eligible to receive health benefits, and 81% were enrolled in company-sponsored benefit programs, says Towers Perrin.

Employers also said they do not expect that reform as currently proposed would address some of the fundamental sources of health care costs. For example, 65% believe that health care reform will have little or no impact on consumer behaviors, according to Towers Perrin.

Cost containment was listed as the most important health care reform goal for 90% of the employers, observes Dave Guilmette, managing director of the Towers Perrin Health and Welfare practice.

Many large employers, however, “feel that current reform proposals are focused on other health care issues–such as expanding coverage and reforming certain insurance practices–and [the employers] feel they have already addressed these issues within their own workforces,” he said.

As for health care proposals currently on the table, 53% of respondents said they believe that research on effectiveness of alternative treatments would have a positive impact on their business by influencing the quality of care over time. And 44% believe that reforming the health insurance market to ensure guaranteed access to coverage regardless of health status will have a positive impact.

However, 47% believe that an employer “pay or play” mandate would have a negative impact on business, Towers Perrin says.

“The way employers would respond to reform proposals that raise or lower their costs is one of our most telling findings–one that could conceivably impact economic recovery,” says Guilmette. “With companies struggling to manage rapidly escalating health care costs and reclaim profits, only 11% of companies would agree to absorb increased health care costs by reducing their profits. The overwhelming majority of companies would respond to higher costs by reducing the benefits their employees receive.”

Other findings of the survey:

–61% say they would stand by their commitments to employee wellness and health promotion programs, even if they no longer offered medical benefits (under the “pay” option of a pay-or-play mandate, for example).

–Among employers based in Massachusetts (which has a pay-or-play mandate on employers and a coverage mandate on individuals), most say they have seen little or no change in employee or employer health care costs or access to or quality of care, but over 66% report their administrative burdens have increased.

Employers surveyed expect they would respond to a pay-or-play mandate in these ways: 37% would provide company-sponsored health coverage that substantially exceeds the standard; 29% would discontinue company-sponsored health coverage and pay the assessment if the per-employee costs of payments to the federal government were substantially lower than their current costs; and 26% would provide company-sponsored health coverage at the level of the minimum standard required.


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