Survey findings released by Towers Watson and Washington-based National Business Group on Health reveal that employers are becoming more aggressive in shifting healthcare-benefits costs to employees.
The survey notes that incremental changes employers made in the past to pass costs to employees were just a drop in the bucket compared to what will likely happen in the future.
The reason for more aggressive transfer of costs is because total anticipated annual costs-per-active employee are expected to reach $11,176 in 2011. This figure is a 7.6 percent increase over 2010, the study noted.
Testifying on March 10 before the U.S. House Committee on Education and the Workforce, J. Michael Brewer, the Kansas City-based president of the Lockton Benefit Group, said companies that were already seeing a 10 percent annual increase in healthcare costs could expect to see an additional 2.5 percent tacked on as a result of the Affordable Care Act (ACA) signed into law last year by President Obama.
In cases where plans are terminated and employees in 2014 move from group-health plans to individual coverage on insurance exchanges called for by the reform, those employees can plan on paying more than double — anywhere from 101 percent to 155 percent — for coverage, according to the Lockton testimony.
Brewer’s testimony chided Congress for adding more cost and labor to a system that already has enough of both.
"Our clients tell us they have no quarrel with the notion that improvements in the health insurance system are necessary to improve access to insurance and reduce the cost of healthcare and concomitantly, the cost of health insurance," Brewer told the committee. "However, they are frustrated that in the effort to achieve those aims the health reform law adds additional expense to their health insurance costs and imposes additional administrative burdens on them."
One place employers will be cutting costs if they haven't already is in the area of dependent coverage. According to the Towers Watson survey, about two-thirds (68 percent) of employers are moving to increase contributions for dependents, and about one-quarter (26 percent) of employers plan to cease sponsorship of retiree-medical coverage.
Mark Olson, a Towers Watson senior consulting actuary, said employers are eying the creation of the exchanges as places to transition out of the burden of providing coverage, with post-retirement coverage one of the focal points for the transition.
"A lot of the employers that we work with are looking at the population and seeing who is more likely to go to the exchanges and get coverage," Olson said an HR Executive Online article.
Olson also said there are employers that are ahead of the pack in their willingness to engage employees in wellness programs, hold them accountable for their health and be more consistent in communicating their expectations for better employee health.
"There are some employers that we have been tracking for a number of years that we call consistent performers, and there are certain interventions that they have done that have allowed them to experience lower rates of increase than other employers," Olson said.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
