Despite efforts to defund PPACA in the Republican-controlled House, and prospects of a Supreme Court test for the federal health reform law, employers are forging ahead as best they can with short-term compliance issues and long-term strategic decisions.
That was one of the take-aways from a presentation by Cara Jareb, a senior consulting actuary at Towers Watson, at a Washington Area Compensation and Benefits Association conference Feb. 17.
Reviewing key components of the Patient Protection and Affordable Care Act, Jareb noted that the individual mandate to buy health insurance is a "core principle in health reform" – and one that has been a target of numerous state-level lawsuits.
"Without the individual mandate, I think, actuarially, it would fall apart," Jareb said. Still, she believes President Obama’s legal team has a decent case for statutory authority under the Commerce Clause.
Most analysts expect that the core legal tests working their way through federal courts will climax in a hearing by the Supreme Court in 2012. Meantime, she advises employers to continue planning as if the law will be funded and deemed constitutional. And most are doing just that.
In fact, though many opponents to health care reform claimed employers would terminate their health care plans due to constrictions and higher costs, overwhelmingly, 94% of employers surveyed by Towers Watson have no plans to terminate their health care plans.
Instead, employers will continue the cost-sharing trend with employees and many more will adopt account-based health plans, especially those accompanied by a health savings account. By 2012, 64% of employers are projected to offer an ABHP and 39% are projected to have ABHP enrollment of more than 20%.
In order to deal with rising costs, many have chosen to drop their grandfathered status because there is not a big enough return if they retained it. In fact, 55% plan to lose their grandfathered status by 2011, rising to 85% in 2013.
In communication efforts, 81% of employers have already educated senior management on health care reform and its implications and 17% plan to do so in 2011. While only about half of that number (42%) has already educated employees about reform and its effect on them, 53% of employers plan to inform them in 2011.
It remains to be seen whether employers will continue their health plans once the state-run insurance exchanges are operational, but it appears they are strategizing long term with the intent of keeping their plans competitive and attractive to prospective and current talent, according to Towers Watson findings.
It may be the case, Jareb said, that employer plans will have more value and lower premiums for employees than the exchanges—at least at first, when the majority of the pool is likely to be less healthy than those outside.
If they do become a viable option, it may behoove an employer with a middle-aged population to funnel their employees into an exchange, whereas an employer with younger employees might decide against this.
Clearly, this type of planning isn’t too far off as the second greatest influencer on health care strategy in the next two years was the health insurance exchanges effective in 2014, which followed the importance of emerging regulatory guidelines and mandates.
The online survey questioned 466 large- and mid-size employers in the summer of 2010.
