Large employers are successfully integrating the principles and requirements of the Patient Protection and Affordable Care Act into their benefits programs, with many finding that they have been able to contain the overall cost of providing health benefits to employees.
That’s the general conclusion of a four-year data analysis by ADP. Its “2015 Annual Health Benefits” study was designed to determine “whether U.S. employers have managed health care costs effectively from 2013 to 2015 — those crucial two years marking the points right before and after key ACA provisions went into effect.” While employers have experienced difficulties and had to conform with a whole new benefits playbook to comply with the act, they are doing so without many of the disruptions experts had predicted awaited them following the law’s creation.
The study both supports and contradicts testimony presented to Congress recently by the Society for Human Resource Management. SHRM described member experience with the act as difficult, costly and overly time consuming.
The testimony spoke mainly to the experiences of human resources professionals, many at smaller companies. ADP’s study involved employers with 1,000 or more employees, companies with considerable administrative resources. ADP agreed that compliance consumed valuable corporate resources and often proved vexxing.
But on the matter of cost, its study appeared to contradict’s SHRM’s assertion that compliance with the law was driving up the cost of benefits and diluting their value.
“While many large employers have been struggling with ACA compliance and administrative requirements, employee participation and premium contribution rates, as well as overall medical premium cost trends appear to be fairly stable,” said Christopher Ryan, vice president, Strategic Advisory Services at ADP. “This stability alleviates some of the concerns expressed early on by policy makers regarding the potential for rapidly rising medical premiums due to new plan design and coverage requirements enacted under the ACA.”
Among the ADP study’s major findings:
Premiums increased by 9.4 percent since 2011, but at a much slower rate — 2.6 percent — from 2014 to 2015.
Premiums jumped the most (11.4 percent) in the trade, transportation and utilities industries, and the least (5.8 percent) among professional services companies. While rate hikes varied by industry, in general industries with higher increases had started the study period with lower premiums, so the net effect was fairly well balanced.
In general more people were eligible for employer insurance, but fewer among the eligible opted for it. ADP suggested that the availability of other forms of affordable coverage may have led to this result.
The take rate and participation rates among those under age 26 declined, even though eligibility rose. Millennials’ take rate declined—12.6 percent, making them the age group with the lowest take rate of 44.1 percent. But such factors as allowing those ages 26 and under to be covered by their parents’ insurance, and the affordability of exchange insurance, may have influenced those numbers.
The 50 – 59 age group is most likely to participate in their employer’s health coverage, at a rate of 74.7 percent. This group also has the highest take rate, at 78.6 percent.
“Taken together, the results of the report suggest that large employers have been effective in managing overall health costs despite concerns over ACA mandated changes,” Ryan added. “Companies may be struggling with ACA compliance and reporting requirements, but five years in, this study reveals the underlying cost trend for large employers remains modest.”