Most Large Employers Will Make Changes to Their Health Care Plans, Study Finds

A survey report (pdf) of 72 large employers finds that most anticipate an increase in health care costs in 2011 as a result of the Patient Protection and Affordable Care Act (“Affordable Care Act”), and are making changes to their plan designs in order to comply with the new health care law and its regulations. The Affordable Care Act will require health care plans to comply with a number of new standards as of September 23, 2010. To offset the projected rise in costs, many employers surveyed claim that they will implement changes that shift some of the financial burden onto employees. Overall, 53% say they will alter their plans, 19% will make no changes, another 19% will scale back the changes to their plans that they had intended to make, while the remaining 9 % of firms were holding off on making any plan design decisions until they reviewed the applicable regulations. With respect to specific changes, most (70%) claimed they planned to remove lifetime dollar limits on overall benefits. Other highlights of the survey include the following:

• While the estimates varied among surveyed employers, the projected average increase in health care costs for 2010 was 7%. This estimate rises to 8.9% for 2011 health care costs. To offset this rise, 63% of employers claim that they will increase the employee percentage contribution to plan premium costs, 46% state they will increase out-of-pocket maximums, and 44% intend to increase in-network deductibles.
• Twenty-one percent of employers believe that the most effective means of controlling costs is providing consumer-directed health plans (CDHP). Sixty-one percent surveyed intend to offer a CDHP in 2011. The majority (64%) of these employers plan to offer a high-deductible health plan (HDHP) with a health savings account (HSA).
• Most (95%) of employers’ CDHPs and 85% of employers’ non-CDHPs cover preventive services at 100% with no deductible and no cost-sharing.
• For 2011 pharmacy benefits, 25% of employers responded that they plan to raise the co-pay/co-insurance for retail pharmacy, and 21% will do so for mail-order pharmacy.
• To manage retiree health care costs, most employers (46%) surveyed impose caps on company contributions. Others increase employee contributions (37%) and eliminate coverage for future retirees (33%).

The report was conducted in the spring and summer of 2010 by the National Business Group on Health, a non-profit organization representing large employers' perspective on national health policy issues. Notably, the survey was conducted before the Department of Health and Human Services (HHS) issued new regulations stipulating how plans that drastically alter or reduce benefits will lose their grandfathered status. Therefore, as with any survey, the results are subject to change.

This entry was written by Ilyse Schuman.

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