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Life Health > Health Insurance > Health Insurance

Reform Driving Up Health Plan Costs

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Compliance with health care reform is already driving up costs for some employers’ group health plans, and a majority of employers expect price increases to be passed on to employees, according to a Willis Group Holdings survey.

Though most employers haven’t yet calculated the cost of compliance with the PPACA, of those who did, more than 55 percent said their total health care costs had risen at least two percent as a direct result of the reforms. More than 15 percent of those employers said their costs have risen in excess of 5 percent since 2010.

“Now that the health care reform act has entered the implementation phase, the costs and benefits associated with the act are coming into greater focus for employers,” says Jay Kirschbaum, practice leader for Willis Human Capital Practice. “The survey suggests employers realize that costs of providing medical benefits will increase and that they will likely have to pass those costs on to their employees.”

Employers report that their most significant cost drivers are the provision of adult child coverage up to age 26 and the removal of the annual/lifetime limits for “essential health benefits.”

The survey, conducted in December by Willis’ Human Capital Practice division, also notes less than half of employers have developed any kind of health care strategy to comply with the law.

Additionally, while most say they expect similar employers to also pass off more of the cost for coverage to employees, a third of respondents think other employers will reduce coverage to the lowest-cost package that will avoid the “pay-or-play” penalty as well as rely more on wellness programs. Finally, nearly two-thirds of the employers expect that employee contributions will be increased.

“While other surveys and publications have found that employers seem reluctant to be the first to drop coverage, reshape work hours, reduce coverage or reduce company financial support for certain benefits, this survey indicates that respondents believe that other employers will take some of these actions,” the survey notes.

More than 2,300 employers participated in the survey.


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