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Two years after Congress passed landmark health care reform legislation, employers are nearly evenly divided on whether the U.S. Supreme Court should repeal the law, according to a survey released today.
Forty percent of employers want the high court, which is hearing oral arguments this week on the constitutionality of the Patient Protection and Affordable Care Act, to strike down the 2010 law. But an even greater percentage of employers—43%—do not want the justices to reject the law, while the remaining 17% said they didn't know, according to the survey of 437 employers conducted by the Midwest Business Group on Health and co-sponsored by the National Business Coalition on Health, Business Insurance and sister publication Workforce Management.
That such a large percentage of employers want the law struck down isn't surprising, said Andrew Webber, president and CEO of the Washington-based NBCH.
“This is a new world for employers. Until now, they have had pretty much of a free ride in how they design their plans,” Mr. Webber said.
But under the health care reform law, some of that benefit design freedom is being taken away, while new administrative burdens are being added.
Employer opposition to the law also is a result of concern about the added costs they will face due to complying with various requirements imposed by the law, said Dan Pikelny, chairman of the MBGH board of directors.
Still, employers are far from being united in favor of repealing the law.
“There is no such thing as "Obamacare,'” said Larry Boress, president and CEO of the Chicago-based MBGH, referring to the term some PPACA critics use when referring to the health care reform law.
Instead, the law has many different chapters. If it is repealed, provisions that many employers support and that have not cost very much—such as insurance market reforms, banning pre-existing medical condition exclusions and extending coverage to employees' adult children up to age 26—would be taken off the books, Mr. Boress said.
“Larger, more sophisticated employers are beginning to recognize that there are some positive provisions of ACA that advance reform of the health care delivery system,” Mr. Webber said.
And there could be an element of pragmatism behind employers' opposition to a repeal of the reform law: concern that “what would replace it could end up being worse,” Mr. Pikelny said.
Regardless of their feelings about the law, the overwhelming majority of employers say they intend to keep their health care plans, contrary to the predictions of some health care reform law critics who said employers would terminate coverage to reap potential savings.
In fact, just 2% of respondents said it was “very likely” they would terminate coverage in 2014 and only 4% said termination is “likely.” By contrast, 71% said it is “not very likely” or “unlikely” they would fold their plans.
When employers do a cost/benefit analysis, many find the cost of ending coverage is likely to exceed the benefits, Mr. Pikelny said. Employers folding their plans will have to pay a nontax-deductible $2,000 penalty for each employee working at least 30 hours a week. Also, increasing salaries to offset at least part of their cost of buying coverage in state insurance exchanges authorized by the law would increase employees' taxable income and employers' and employees' payroll taxes, which in many cases could be more costly than maintaining coverage.
Still, the health care reform law has boosted employers' costs and workload. Fifty-seven percent said the law has increased benefit costs, and 48% said the law has resulted in more work for them.
The cost increases for upgrading plans to comply with certain health care reform law mandates, though, have been relatively modest. Sixty percent of employers said amending their plans to offer coverage to employees' adult children up to age 26 increased costs in 2011 by less than 2%.
Also among the survey findings, 58% of employers said their health care plans already have lost their “grandfathered” status, and only 3% think their plans will never lose grandfathered status. Grandfathered plans are exempt from certain health care reform law requirements, such as providing full coverage for preventive services. But to retain that status, plan sponsors are sharply restricted in how much they can boost employee copayments and deductibles, among other things.
Finally, employer support for repeal of health care reform law provisions varies widely by provision. The most unpopular one—which 66% of respondents want repealed—will, effective in 2013, impose a $2,500 cap on the pretax contributions employees can make to health care flexible spending accounts. Currently, there is no dollar limit. On the other hand, just 16% favor repeal on the ban of annual and lifetime dollar limits for essential health care benefits.
Summaries of the survey, “The Health Reform Law's Impact on Employers' Health Benefits,” are available at www.mbgh.org.