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Most employers won't drop health care benefits: Poll

Posted On: Apr. 11, 2010 12:00 AM CST

Most employers won't drop health care benefits: Poll

A nationwide survey of business executives indicates most U.S. employers, at least for now, are unlikely to stop offering health care benefits in the wake of the landmark federal health care reform law.

The online survey of nearly 3,700 executives, conducted by Crain Communications Inc. publications Workforce Management and Business Insurance, found that 52.5% strongly disagreed with the statement that it would be better for their organizations to stop offering health care benefits and pay a fine under the new law. Another 15.3% somewhat disagreed with the notion of dropping coverage and paying the fine.

Eighteen percent somewhat agreed with the idea of dropping coverage; only 14.1% strongly believe their organizations would be better off in dropping benefits.

Under the health care reform law, beginning in 2014, employers with 50 or more full-time workers must offer health care coverage or pay a fine of $2,000 per full-time worker per year.

Among the largest employers—those with 25,000 or more workers—64.9% strongly disagreed with the statement that their organizations would be better off dropping health care benefits. Another 12.4% somewhat disagreed; 14.2% somewhat agreed and 8.4% strongly agreed.

The survey also found executives overall have a mixed level of understanding of the reform legislation.

When asked whether they understand the impact the law will have on their benefit programs, only 17.7% strongly agreed that they understand, while 43.9% somewhat agreed. More than 38% either somewhat or strongly disagreed that they understand the impact.

More than 61% of the survey respondents identified themselves as responsible for the purchase and/or administration of health care benefits, while 38.7% did not have such responsibilities.

Respondents with benefits decision-making responsibility—including C-suite executives—reported similar levels of understanding as the overall survey group. About 18% strongly agreed they understood the impact of the law, while 44.9% somewhat agreed and 37.3% somewhat or strongly disagreed.

In that same group of benefits decision-makers, 51.3% indicated they strongly disagreed it would be better for their organizations to drop benefits, while 15.4% somewhat disagreed. About 18.5% somewhat agreed it would be better, and 14.8% strongly agreed.

Larry Boress, president and CEO of the Midwest Business Group on Health in Chicago, which represents midsize and large employers, said the main issue for his group's members right now is the uncertainty created by the health care reform law.

“The reaction to the health care reform legislation is, "What do I have to do now? Does this impact my employee population and my benefit programs?'” he said. “People are grasping for information that will apply to them, and they're really focused on what they need to do next.”

As for opting to stop offering health care benefits, Mr. Boress said that is unlikely among larger employers but might happen among smaller companies.

“No one's going to make a big move to drop benefits unless they see an industry leader, a big company, make a move,” Mr. Boress said. “Smaller companies may be a different story. They have to decide, "Is it going to be cheaper for me to pay the fine?'”

When asked whether they would continue offering health care benefits because they are critical to employee recruiting and retention, 65.7% of survey respondents strongly agreed. Another 25.6% somewhat agreed, while 5.2% somewhat disagreed and only 3.5% strongly disagreed.

Regardless of whether employers decide to stop offering health care benefits, Mr. Boress said employers must communicate their intentions.

“Employers historically have not communicated well on benefits. People are stressed out enough because of the economy, and now the health care reform legislation is causing them to run around asking, "Am I going to have benefits?' Employers need to give basic information and start communicating that to employees,” Mr. Boress advised.

“We're not seeing a jump-for-joy reaction that the legislation will help address the cost of health care,” said Tom Hutchinson, president of MidAmerican Group Inc., a Westmont, Ill.-based insurance brokerage and employee benefits consulting firm. “If anything, employers are concerned that it will increase their costs in the short term.”

As an employer with 25 full-time workers, MidAmerican Group is “in the same boat” as many of its clients, Mr. Hutchinson said. “We ourselves are still absorbing the details of the legislation. An initial response is, "If lifetime maximums (dollar limits on benefits) are removed, what's that going to do to our rates?'”

“It's still too early to tell. We hope that health care cost increases will abate,” he said.

MidAmerican Group, however, does not plan to stop offering benefits, Mr. Hutchinson said. “We do not charge our employees anything for benefits. Employees have the ability to buy up” certain benefits, but health care and other basic benefit programs are provided at no charge, which MidAmerican Group views as an important recruiting tool, he said. “We're hoping we can continue to have that differentiator for us.”

An important next step is for regulations to be written, providing guidance to implement the new health care reforms, Mr. Boress noted.

“None of this will function without regulation. Building a law is like saying, "We're going to build a bridge from Chicago to Michigan City, Ind.' The law just says you're going to build the bridge. The regulation tells you what materials to use, when to build, and so on,” Mr. Boress said.

“The administration needs to have a sit-down with leading business organizations, with the people who are going to be responsible for implementing the law, and identify the issues and problems they're facing,” he said. “We don't need legislators to do anything else” on health care reform; “we need them to sit down and clarify the provisions. They're not going to repeal this law, but they can make it easier to implement.”