Just last summer, we all waited to see if the Affordable Care Act would be declared unconstitutional by the highest court in the land. It wasn't. Then there was the 2012 election, which some thought would be a game-changer that would have resulted in a repeal of the law. It didn't.
Now, benefit consultants, industry professionals and employers are trying to determine the implications of these mandates that will have the biggest impact on group benefit strategies. One is the so-called "pay-or-play" provision, which would require employers with more than 50 full-time employees to pay a penalty of $2,000 per employee, with increasing penalties in future years, if they choose not to provide a qualified company sponsored health plan. Some companies may decide it's cheaper to stop providing health insurance, and instead pay the penalty or treat employees to a defined contribution that they can use to purchase insurance from a state-run exchange.
While some companies have indicated they would have to drop health coverage, 88% of large companies say they have no plans to stop providing health insurance in the foreseeable future, according to an August 2012 study by Towers Watson. Other recent studies offer similar percentages.
It's worth noting that between 2000 and 2010 the percentage of employers offering health insurance had already dropped seven percentage points due to the rising cost trend that was long established prior to the ACA. In that period of time, it was commonplace for employers to see annual double-digit premium increases, depending upon company size.
Still, the 2012 Towers Watson study notes that 77% of companies said health care benefits were central to rewarding and retaining employees, so it appears that most companies are motivated to keep offering health benefits for the same reason companies have always offered employee benefits - to compete for talent.
While the ACA changes the employer-employee-insurer dynamic, critics say the law does little to control one of the main root problems that prompted reform in the first place: health care costs.
Addressing the problem
Todd D. Pline, head of strategic business development and distribution for Aetna's voluntary products business, says, "It's never been more important for employers to work closely with consultants and brokers who, a) know the regulations, b) can think strategically and c) can look ahead and aggressively address cost-related issues."
A 2012 report by Aon Hewitt estimates the annual increase in health care (not-premium) costs to be 8-9% for the coming years - although the past three years have seen drastically lower rates of increase, likely due to uninsured workers and individuals delaying their use of the health care system. So, where does this leave us? The high cost of providing health care was the problem before reform, and it remains the major problem for the near future.
While benefit consultants and employers are engaged in redesigning their health plans to meet ACA requirements and doing the calculations to ensure they can afford them, why not use this opportunity to really start fresh?
"If you haven't already introduced a high deductible health plan as an option, now is the time," adds Pline.
The Aon study notes that the impact of just 15 chronic conditions accounts for more than 65% of health care costs. Eight common health risks feed these costly conditions, according to the report, which also asserts that, "Employers who can target and impact just three of the eight health risks can save as much as $700 per employee, per year."
It appears that we may already have some of the critical solutions to the health crisis at our disposal. The tools needed to influence health across employee populations are available in many forms. Options include off-the-shelf wellness plans; add-ons to major carriers' health plans; programs custom designed by consultants; and programs designed by employers. Components can include biometric screenings, health risk assessments, exercise programs and much greater incentives for preventive care than any HMO ever offered.
To maximize any of these options, employers must make them a central part of any benefits program. They must communicate them well, incorporate incentives, and make them part of the corporate culture. And they must measure results, making adjustments as needed.
Since now is the time that consultants and most employers are sitting down at the drawing board to reevaluate their health benefit plans, this is the time to take a step back and look at managing not just costs and compliance, but health. This is not just the time to add on a wellness plan, but to design a plan around wellness. I hope employers of all sizes will take this opportunity to do health benefits right.
McCauley is senior vice president of marketing at Univers Workplace Solutions.
