For one-third of America's private companies, it's too soon to tell how the health care reform act will impact their bottom line. And the lucky 20 percent that anticipate above-average revenue growth say there won't be a notable financial impact.
Still, PricewaterhouseCoopers' Private Company Trendsetter Barometer shows nearly half (47 percent) of executives surveyed say the PPACA may have a financial impact on their business. Most of them – 70 percent – have begun reviewing their health care benefit plans in light of reform, but 55 percent have not yet determined what changes need to be made to their companies' plans. Only 15 percent have started to take action.
The Barometer couldn't point to exact provisions CEOs say would impact their company. "Although we're seeing CEOs begin to review their options and healthcare strategy, on the whole they're uncertain about how significant an impact the provisions will have on their organization," says Ken Esch, a partner in PwC's Private Company Services practice.
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Although a fair number of private companies expect the tax provisions (starting in 2013) to have a moderate to significant effect on their business (31 percent say this about the Medicare tax increase and 26 percent about the net investment income tax), the overall response to those provisions was mixed.
"This is an interesting time for Trendsetter CEOs, when you consider they'll be implementing new health care requirements in tandem with increasing tax rates," says Esch. "It's possible this could create a cash flow issue as CEOs look to continue reinvesting in their business. Every company is different, of course, but we're seeing clients consider accelerating income or deferring deductions now at the lower tax rate, which should provide a permanent tax benefit when rates go up."
Despite uncertainty about the impact of the Act, many Trendsetter CEOs say they intend to change current processes and plan structures:
- 70% of respondents plan to re-evaluate their companies' overall benefits strategy;
- 60% plan to change their benefits;
- 52% are likely to significantly change employee contributions for medical coverage;
- and 42% are likely to increase their companies' investments in wellness programs.
| Likely company actions | %Likely | %Unlikely | % Not certain/Not reported |
| Re-evaluate your overall benefits strategy | 70 | 25 | 5 |
| Change your company's benefits to comply with the Act | 60 | 28 | 12 |
| Significantly change employee contributions for medical coverage | 52 | 31 | 17 |
| Increase your company's investments in wellness programs | 42 | 44 | 14 |
| Cover employees through state-run health insurance exchanges (available in 2014 for small employers and 2017 for large) | 17 | 49 | 34 |
| Set up or significantly change retiree medical benefits | 7 | 52 | 41 |
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