According to a recent survey conducted by financial consulting firm Deloitte, the majority of employers will not abandon their provision of health insurance coverage within the next three years. Many of the Affordable Care Act’s (ACA) provisions – including the requirement that most large employers provide their full-time employees with “minimal essential” health coverage or pay a penalty – will take effect in 2014. The Deloitte survey solicited responses from 560 randomly selected employers with 50 or more workers that currently offer their employees health benefits. According to Deloitte, the survey took into account firm size, industry type, and location in order to obtain a fair sampling of responses to represent the private sector workforce. Some of the survey’s key findings are as follows:
- Only 9% of employers representing 3% of the workforce responded that they were likely to drop coverage within the next three years. In contrast, 81% of companies representing 84% of the workforce stated that they did not anticipate abandoning coverage. The remaining 10% representing 13% of the workforce responded that they were unsure of their plans regarding the provision of health insurance. As expected, the larger the company, the less likely the organization is to drop coverage. For example, only 1% of employers with 1,000-2,499 employees predicted that they would stop providing coverage within the next three years, while 13% of employers with 50-100 employees stated that they were likely to stop providing health coverage during this period.
- Employers in the retail (22%) and manufacturing (17%) industries reported that they were most likely to drop coverage, while those in the wholesale (0%) and service (7%) industries reported that they were least likely to do so. According to the survey, prohibitive cost is the chief explanation employers gave for choosing to abandon their health plans.
- The top reasons employers gave for deciding to keep their insurance coverage was to retain and attract good employees, and maintain morale and employee satisfaction.
- To manage costs, many employers will resort to increased cost-sharing with employees and the use of preventive health (“wellness”) programs. Sixty-nine percent of responding employers claimed that they plan to increase insurance plan deductibles and co-pays; 68% reported that they plan to increase employee premium contributions; 62% plan to increase wellness and preventive health programs; 52% said they plan to introduce high-deductible health plans/consumer-driven health plans; 34% plan to reduce covered benefits; and 28% said they would consider shifting to a defined contribution arrangement. Another cost containment strategy under consideration is direct contracting with provider organizations.
- Only 28% of employers believed themselves to be “prepared” to implement the ACA provisions that are to take effect in 2014. On the whole, larger employers considered themselves more prepared for these changes than smaller employers.
- The future health insurance exchanges are viewed as a viable means of providing insurance to employees. Smaller employers were more inclined to view the exchanges favorably.
- If the insurance exchanges prove to be effective at providing health insurance, employers might be more apt to dropping coverage in the future. The survey examined various scenarios in which an employer would stop providing coverage, and determined that approximately 23 million to 65 million individuals might join a health insurance exchange by 2020.
A full copy of the report can be downloaded here. (pdf)
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