Employers weigh rising costs, overall coverage options

For now it seems employers will continue to offer health benefits, rather than shift workers to insurance exchanges to obtain coverage on their own.

The Government Accountability Office (GAO) stated in a July report that the Patient Protection and Affordable Care Act (PPACA) had little impact on the prevalence of employer-sponsored coverage in its first two years, and that this trend should hold for the near future. Although some firms might drop coverage, PPACA might prompt others to offer benefits.

A Deloitte study of employer attitudes about healthcare and reform indicates confusion and even hostility about the specific requirements of PPACA. Even so, the vast majority of firms (81%) wish to continue coverage, says Paul Keckley, executive director of the Deloitte Center for Health Solutions, while supporting efforts to improve health system performance and lower its costs.

The coverage picture is murkier in the small business community, which fought hard to kill PPACA and the individual mandate. Retailers and restaurant operators are particularly concerned about high costs and burdensome new requirements. The National Federation of Independent Business (NFIB) is focusing its efforts now on particularly onerous reform provisions, such as the excise tax on insurers that promises to push up premiums, and rules for defining whether a company has 50 employees or fewer, thus exempt from the coverage mandate.

EMPLOYEES RESPONSIBLE

A main strategy for employers is to curb the cost of providing health benefits, which they predict will rise 7% on average in 2013, according to NBGH. Almost two-thirds of 82 companies responding to the NBGH survey said they will ask employees to pay a larger share of premiums, but cost-sharing will not rise as much in the coming year as in the past. Instead, employers are looking to rein in expenditures by adopting consumer-directed health plans and wellness initiatives, and to manage pharmacy benefits by adopting step therapy and mail order, particularly for high-cost specialty drugs.

While large employers are fairly confident about offering health benefits for the next five years, they are less certain about coverage in 20 years, according to NBGH President Helen Darling. Employers will strive to avoid high-cost plans subject to the "Cadillac tax," and will offer at least one plan with some kind of flexible spending account. Companies also will promote more online price transparency to help steer employees to more efficient providers.

Large employers worry how much essential health benefits will vary by state. If a long list of state mandates emerges, that will reduce employer flexibility.

Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.