New Survey on Employers' Reactions to Health Reform Post Mid-term Elections

While employers plan to continue providing benefits and see value in keeping employees healthy, they anticipate higher costs due to health reform

CHICAGO and WASHINGTON, Jan. 3, 2011 /PRNewswire / -- Today the Midwest Business Group on Health (MBGH) released the results of a recent national employer survey gauging the reactions and concerns related to health reform after the mid-term November elections. Conducted by MBGH and co-sponsored by the National Business Coalition on Health (NBCH), Business Insurance and Workforce Management, the findings indicate that employers believe the law will increase their benefit costs and changes are needed in the law to improve quality, reduce expenses and reward health system performance. This is a follow up of an MBGH survey conducted with Business Insurance in April 2010 to gain an understanding of areas of most concern to employers on health reform to help educate and inform purchasers.

"There remains a great deal of uncertainty among employers about how health reform will ultimately impact their efforts to provide health benefits for their employees," said Larry Boress, MBGH president and CEO. "However, it's clear that keeping workers healthy is a key focus. In fact, employers are already implementing strategic health management approaches and these are quickly evolving into viable cost reduction strategies."

Key survey findings

• Fifty-three percent of all employers and 67% of large employers say they do not plan to drop health benefits. However, based on the potential penalties and recent modeling of potential impact, 22% of all employers said that it is likely that they would consider dropping benefits altogether.
• Of those who say they will drop coverage to avoid the penalty, only about 20% will raise worker salaries to help pay for individual coverage.
• Almost 60% of all employers stated that they will expand wellness programs in light of increased incentives allowed.
• Sixty percent of all employers and 50% of large employers believe the intention of health reform is to eliminate the employer-based system and move to a single-payer system.
• About a third of all employers noted that they have assumed all costs of extending coverage to adult children up to age 26; with one-third responding that the cost of extending coverage has been shared with employees. This reflects a change from April when employers were split 50/50 as to whether they were likely to charge more for dependents as a result of the provision.
• Fewer employers noted that they plan to drop retiree benefits than in April. Of those employers who offer retiree benefits, about a third of large and 12% of small employers will continue to offer benefits, 4% noted that they will drop benefits, and 4% will provide some supplemental plan or contributions to help retirees get coverage.
• The survey indicates that 65% of all employers and more than 80% of large employers have done some modeling on how health reform will impact their benefit costs and 25% of all employers are showing increases of two to five percent, with 15% showing increases of six to ten percent.
• Eighty-six percent of all employers indicated that it's unlikely that current provisions will reduce the rate of health care cost increase and 74% of all employers believe it's likely health reform will boost costs even more than if the legislation was not passed.

Quality and cost provisions

When asked what quality and cost provisions in the law were considered valuable and should be retained, employer responses included: almost 60% want to replace the fee for service with bundled payments; over 45% of all and 52% of large employers want to develop accountable care organizations; more than half want to continue to develop the medical home concept; 55% of all and 70% of large employers want to see development of quality and performance based provider payments; and 62% of all and 74% of large employers want the law to promote the use of value-based designs and incentives to motivate change.

"The survey results reflect employer frustration that cost containment, as their priority goal for health care reform legislation, is not, at present, being realized," said Andrew Webber, president and CEO of NBCH. "While there appears to be strong support for the legislative provisions related to payment reform, value-based insurance design, medical homes, and accountable care organizations, I think employers are signaling the Obama Administration that these delivery reform and value-based purchasing strategies need to be fast-tracked. Cost containment cannot wait."

Survey details

The online survey was conducted from late November to mid-December 2010 on the intentions and perspectives of employers concerning the Patient Protection and Affordable Care Act. There were approximately 430 respondents; 43% representing employers with more than 500 employees. A summary of the findings is available by contacting MBGH at [email protected]. The full survey results can be purchased.

About Crain Communications Inc.

Crain Communications Inc. is one of the largest privately owned business publishers in the U.S., with nearly 30 business, trade and consumer publications and related Web sites in North America, Europe and Asia. As authoritative sources of vital news and information to industry leaders and consumers worldwide, the company's newspapers, magazines and Web sites have become required reading in their respective business and consumer sectors, with titles including Advertising Age, Automotive News, AutoWeek, Business Insurance, Pensions & Investments, Modern Healthcare, InvestmentNews and Workforce Management as well as business weeklies in Detroit, Chicago, Cleveland and New York. www.crain.com

About the Midwest Business Group on Health

Celebrating 30 years of advancing value in health benefits management, the non-profit Midwest Business Group on Health (MBGH) is one of the nation's leading business groups of private and public employers. MBGH's more than 100 members represent over 3 million lives, spending more than $3 billion on health care benefits annually. MBGH member benefits include health benefit education seminars, networking opportunities, research, demonstration projects and community initiatives. MBGH is a founding member of the National Business Coalition on Health. www.mbgh.org

About the National Business Coalition on Health

NBCH is a national, non-profit, membership organization of 53 purchaser-led business and health coalitions, representing over 7,000 employers and 25 million employees and their dependents across the United States. NBCH and its members are dedicated to value-based purchasing of health care services through the collective action of public and private purchasers. www.nbch.org

SOURCE National Business Coalition on Health; Midwest Business Group on Health