Willis Survey: Employers Vague on Health Care Reform Costs

Despite Health Care Reform Concerns, Employers Appear Committed to Providing Medical Benefits

Broker Publishes 2014 Health Care Reform Survey

NEW YORK, June 9, 2014 (GLOBE NEWSWIRE) -- Although health care reform is a top concern for U.S. employers, most organizations have not measured its cost impact, according to a survey released today by the Willis Human Capital Practice, a unit of Willis Group Holdings plc (NYSE:WSH), the global risk advisor, insurance and reinsurance broker.

Only 37% of respondents have identified the cost impact of health care reform on their health plans in 2014. While this is an increase over the 28% of respondents that had identified these costs in last year's survey, "it demonstrates that for many organizations, determining an accurate assessment of these figures is still a challenge," the survey said.

Of the respondents that identified a cost impact of health care reform, over half (54%) noted a cost increase between 0% and 5% while 22% estimated their increase in the 5%–10% range. Meanwhile, group medical costs for employers continue to rise. Nearly three-quarters (74%) indicated their health plan costs increased in 2014. Understanding how much of that increase is due to changes in compliance versus other factors, such as medical trend, is crucial to their strategic planning, Willis said.

Despite some highly visible reports in the media to the contrary, employers generally do not plan to eliminate group medical benefits as part of their compensation practices, the survey indicated. Sixty percent of respondents said they were extremely unlikely to "move away from benefit engagement" and another 17% said that they were somewhat unlikely to do so.

The Willis Health Care Reform Survey 2014, available here, details employers' current and future strategies in addressing the Patient Protection and Affordable Care Act (PPACA), which ushered in the current era of health care reform. The survey presents findings from a diverse population, polling more than 1,000 employers of varying sizes, industry sectors and geographies.

Other key findings of the survey include:

  • Cost shifting is only part of the solution to rising costs: The majority of respondents experienced an increase in their health plan costs from 2013 to 2014, but of those who reported a cost increase, almost a quarter kept employee contributions the same.
  • Almost half of respondents have already increased or plan to increase dependent coverage contributions at a higher rate than employee-only coverage. Increasing dependent coverage contributions is reported by 15% of respondents and another 26% plan to implement this strategy over the next three years. Twelve percent of respondents have already added a surcharge or eliminated coverage for spouses if they have coverage through their own employer.
  • Despite the fact that one of the goals of health care reform is to expand coverage, the survey data suggests, ironically, that coverage has been reduced for some part-time employees. Fourteen percent of respondents have already eliminated coverage for part-time employees in 2014, and another 8% plan to do so moving forward.
  • Nearly one-third (32%) of respondents have already implemented or plan to expand existing wellness programs to help control rising group medical costs.
  • The use of private health care exchanges, an option that was unheard of just a few years ago, is being considered by a surprising number of employers (although actual adoption is still quite low). Twenty percent of respondents are considering private exchanges. The opportunity to control costs through a defined contribution approach while providing greater choice to their workforce is an attractive strategy for many organizations, the survey indicated.

"Responding to the mandates and changes required by health care reform has been an evolving challenge for employers since the law's implementation," said Jay Kirschbaum, Practice Leader of the Willis Human Capital Practice's National Legal and Research Group.

"The results of the survey underscore that organizations recognize the value of offering competitive medical benefits to employees, and despite concerns over health care reform, appear poised to continue to offer employer-sponsored health plans as part of a total rewards package. This finding supports Willis's view, based on our day-to-day discussions with clients, that organizations are deeply committed to their employees and their employees' well-being," Kirschbaum added.

"The surprising finding is that few employers actually know how expensive compliance with health care reform has been or will be for their organizations. Without that knowledge, employers may not be able to accurately assess the impact and determine the optimal way to proceed with their plans. Willis suggests organizations turn their attention to the bigger picture as they start to adjust their benefit strategies," Kirschbaum said.

The survey was conducted between January 13, 2014 and January 31, 2014. A copy of the free report can be accessed here: http://www.willis.com/documents/publications/Services/Employee_Benefits/20140606_Willis_Health_Care_Reform_Survey_Report_2014.pdf

About Willis

Willis Group Holdings plc is a leading global risk adviser, insurance and reinsurance broker. With roots dating to 1828, Willis operates today on every continent with more than 18,000 employees in over 400 offices. Willis offers its clients superior expertise, teamwork, innovation and market-leading products and professional services in risk management and transfer. Our experts rank among the world's leading authorities on analytics, modelling and mitigation strategies at the intersection of global commerce and extreme events. Find more information at our website,www.willis.com, our leadership journal, Resilience, or our up-to-the-minute blog on breaking news, WillisWire. Across geographies, industries and specialisms, Willis provides its local and multinational clients with resilience for a risky world.

CONTACT: Media: Colleen McCarthy +1 212 915-8307 colleen.mccarthy@willis.com Investors: Peter Poillon +1 212-915-8084 peter.poillon@willis.comSource:Willis Group Holdings