As controversy continues to brew over the validity of a McKinsey survey finding 30% of respondents would likely drop employee health care coverage in the years following the implementation of health reform’s state exchanges, a survey on the same topic from Lockton reveals a more conservative estimate: nearly one in five employers (18%) say they will consider terminating group coverage.

Overall, 80% of employers responding to Lockton Benefit Group's May 2011 Lockton Employer Health Reform Survey are concerned or very concerned about the potential impact of the Patient Protection and Affordable Care Act. Most plan sponsors express frustration that the law makes health plan administration even more difficult. The law "created a lot of administrative burdens to employers,” notes one survey respondent. It has “confused employees and increased cost substantially.”

The results confirm the sentiment Lockton associates have been hearing from clients for months, “that many of them are very, very apprehensive about the reform law's mandates,” says Edward Fensholt, director of Lockton’s Compliance Services Division and a member of the firm's Health Reform Advisory Practice. “From CFOs to human resource managers, the comments were generally consistent — they know there is a lot of extra work and additional expense ahead.”
Even so, the survey finds several reasons the majority of respondents plan to retain employee health plans:

  • To use the health plan as an attraction and retention tool (86%)
  • Concern that employees would have to pay more in the exchanges to replace employer coverage (30%)
  • Desire to avoid paying a penalty to the exchanges (26%)

Lockton clients also identified the top potential benefits of PPACA, such as the increase in wellness incentives (37%), access to the exchanges for part-time employees (31%) and retirees under age 65 (23%), as well as the option to terminate coverage knowing employees will have another option in the exchanges (16%).
Meanwhile, McKinsey stands by its survey results , saying its poll of private sector employers was not meant to be a predictive analysis but rather a measurement of employer attitudes toward health reform.


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