How will the Patient Protection and Affordable Care Act affect employers? How much will it cost? Will employers continue to offer coverage in the post-reform era? Those and many other issues were discussed by Randy Abbott, a senior consultant in the Wellesley Hills, Mass., office of Towers Watson & Co., who spoke recently with Business Insurance Editor-at-Large Jerry Geisel.

Q: How far along are employers in making the changes needed to bring their health care plans into compliance with the reform law?

It depends on whether employers have elected to have their plans grandfathered or not. If they have elected to forgo grandfathered status, they are faced with a more complex set of challenges. Those employers are really scrambling to be prepared.

My impression is that within our client base, employers are working overtime to keep abreast of everything.

Q: How expensive will it be for employers to upgrade their plans to meet the requirements laid down by the reform law?

For most employers with grandfathered plans, the cost impact is varying from perhaps half a percentage point increase to a one percentage point increase. For nongrandfathered plans, the cost increase typically will range anywhere from a point to a two percentage point increase in 2011.

The actual cost increase for an individual employer will vary depending on their starting point. The employer with a $1 million lifetime dollar limit will, for example, have a different cost impact than the employer with a $5 million limit.

Q: Because employers will be required to expand coverage in certain areas, like the elimination of lifetime dollar limits, will they be shifting more costs to employees to offset the added expense?

We are not seeing major cutbacks at this point. Most plan sponsors we are working with now plan to nominally increase employee premium contributions and nominally increase point-of-care cost-sharing. But over the long term, employers will be focusing more aggressively on how to mitigate cost growth.

Q: In theory, as more people gain coverage, shouldn't there be less provider cost-shifting to employer-sponsored plans?

I don't think employers are that optimistic. The concern right now is how are we going to cope with 30 (million) or 35 million newly insured Americans going into a system that is already wildly overburdened.

That is going to be a real challenge for employers. It is a concern manifested by the fact (that) if appointment wait times are longer, people will be less productive and may be unable to return to work as quickly as we would like.

As a result, we are seeing a growing number of employers considering whether to provide primary care services on-site.

Q: Is there anything in the health care reform law that will benefit employers?

Once we get through the initial rash of compliance-oriented activity, there will be a focus on whether it makes sense for employers to offer core health benefits for employees and retirees.

If the state insurance exchanges are up and running and are viable, that will give employers the opportunity to step back and rethink their role. Some may well decide to get out of the health insurance business. Others may decide to stay in, but doing so in a very different way compared to what they have done in the past. We are beginning to see, in fact, that health care reform as a real opportunity for employers to rethink their positions.

Q: What is the likelihood that efforts to repeal the law will succeed?

Right now, we have the law. It has been passed. Regulations are being released. There is the potential that there could be changes around the edges, especially if there is a change in who controls the Congress, but outright repeal seems very unlikely.

Our view is to hope for the best and plan for the worst. So, pragmatic employers are going to be thinking through the various options, allowing themselves enough flexibility in their future views to be able to change as the environment changes around them.