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PPACA: Willis Measures Employer Gloom

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A majority of U.S. employers want to keep their group health plans going after 2014, but they are afraid the Affordable Care Act will increase their own benefits costs and employees’ costs.

Consultants in the New York office of Willis Group Holdings P.L.C. and Diamond Management and Technology Consulting Inc., Chicago, have published that finding in a summary of results from a recent survey of about 1,400 employers. The sample included employers with just 1 to 24 employees as well as large and midsize employers.

The consultants asked about the participants views on the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA). One section of the act will create Compassa health insurance exchange system that will distribute standardized, subsidized individual health insurance plans. Another section will require large employers that fail to offer group health coverage to pay a penalty.

If the penalty costs less than group health insurance, many employers could decide to pay the penalty, drop their health benefits and dump employees into the exchange system, some health policy experts warn.

Mercer, New York, a consulting firm, looked at the private coverage “crowd out” issue in survey results published earlier this week and found that about 6% of employers with more than 500 employees and 20% of smaller employers were thinking about dropping health coverage in 2014, when when the exchange system and the “employer responsibility” penalty system are set to take effect.

About 59% of the employers that participated in the Willis-Diamond survey said they probably will continue to offer health benefits in 2014, but 12% said they are somewhat or very likely to shut down their health plans and encourage employees to buy coverage through the exchange system.

Some survey participants said they believe Affordable Care Act provisions could lead to positive changes: 26% said they expect the act to increase employee health consciousness.

Many more participants — 88% — said they think the act will increase

health plan costs.

One Affordable Care Act mandate will require plans that offer dependent coverage to extend access to dependent coverage up to age 26. That provision started to take effect for some plans earlier this year, and it will take effect for many more Jan. 1, 2011.

About 53% of the Willis-Diamond survey participants said they expect that provision to increase plan costs by 1% or more, and 18% expect the provision to increases costs by 5% or more.

When employers were asked how they will respond to the effects of the Affordable Care Act on health benefits, 84% said they expect to increase employee contribution requirements as a result of the act, 51% said they might cut dental or vision benefits, and 44% said they might consider layoffs.


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