New Ernst & Young LLP Report Reveals Key Issues, Level of Readiness for U.S. Companies on Health Care Reform

NEW YORK, Dec. 10, 2010 /PRNewswire/ -- Managing the changes resulting from health care reform is seen as a very important or critical business issue by U.S. employers, yet many report they have not undertaken what they consider to be a full analysis of the financial impact of the law, according to a report released today by Ernst & Young LLP.  

But while employers are concerned about rising health care costs and compliance with the new health care reform law, they are continuing to evaluate what such changes will mean for their businesses and making the necessary adjustments to their current business model.

The report, entitled Moving forward: companies speak out on health care reform, analyzes the issues of greatest concern to executives and their perceived level of readiness to comply with the Patient Protection and Affordable Care Act (PPACA). The findings are based on a survey of 381 executives, representing 347 companies.  The survey was designed to gauge executives' perceptions of their organizations' readiness to comply with the law, as well as the ways they are planning for this unprecedented change to health care in the U.S.

Results reveal that companies across a variety of industries clearly recognize the need to plan adequately so they are in compliance with the health care law, with 84% of respondents stating that such planning is important. However, despite their awareness of the implications of health care reform, more than 40% of respondents indicated they have not undertaken what they consider to be a full analysis of the financial impact of the new law on their business.

"The health care reform law brings with it some of the most significant changes seen in decades for employers and the benefits they offer to employees," says Lynne Parrott, an Advisory Services Partner at Ernst & Young LLP. "Companies likely to be successful in addressing these changes will be those that can quickly adapt their business models to ensure they are in compliance with the law, have the ability to offset the impact of rising health care costs on profitability and are able to engage and collaborate with payors, providers and other third-parties in ways they have not previously done before."

Key findings from the report include:

• Rising costs associated with health care in general as well as those which stem from compliance with the new health care reform law are key concerns for employers. Thirty-four percent of respondents said their company's biggest challenge or risk arising from the law will be the impact of health care costs on profitability, while 31% cited the impact of added expenses associated with complying with the law.
• Only 39% of respondents reported their companies have evaluated what the full effect of the health care law will be on the cost of employee health benefits. Of this group, 43% said they anticipate significant cost increases as a result of the law and only 1% said that they expect it to decrease costs.
• At the time of the survey, 92% of respondents said they intend to continue offering health care benefits to employees, while 8% said they were considering discontinuing employee health care benefits.
• More than three-quarters (76%) of respondents said their companies are at least somewhat likely to increase the amount employees pay for their health care coverage as part of their cost-reduction strategies.

"Health care reform is a tremendous change for all involved, requiring employers to consider a range of issues beyond just cost, including the composition of their current workforce and the potential impact on their ability to attract and retain top talent," adds Jim Bosserman, Director of the Performance and Reward group at Ernst & Young LLP. "Companies must take a hard look at what the overall impact of the health care reform law will be on their organization, starting with an analysis of their employee base. They will also need a roadmap to help guide them through the various changes, in addition to a solid plan for communicating these items to their employees."  

The full report is available on request or at www.ey.com/healthcarereform.

About the survey

From August to September 2010, Ernst & Young LLP conducted an online survey of 381 professionals representing 347 companies. Respondents included C-suite level executives in Finance, Human Resources and Tax.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity.

This news release has been issued by Ernst & Young LLP, a member firm of Ernst & Young Global Limited serving clients in the U.S.

SOURCE Ernst & Young LLP