MBGH releases survey results of employers' reactions to health reform

While employers plan to continue providing benefits and see value in keeping employees healthy, they anticipate higher costs due to health reform

Today the Midwest Business Group on Health (MBGH) released the results of a recent national employer survey gauging the reactions and concerns related to health reform after the mid-term November elections. Conducted by MBGH and co-sponsored by the National Business Coalition on Health (NBCH), Business Insurance and Workforce Management, the findings indicate that employers believe the law will increase their benefit costs and changes are needed in the law to improve quality, reduce expenses and reward health system performance. This is a follow up of an MBGH survey conducted with Business Insurance in April 2010 to gain an understanding of areas of most concern to employers on health reform to help educate and inform purchasers.

"There remains a great deal of uncertainty among employers about how health reform will ultimately impact their efforts to provide health benefits for their employees," said Larry Boress, MBGH president and CEO. "However, it's clear that keeping workers healthy is a key focus. In fact, employers are already implementing strategic health management approaches and these are quickly evolving into viable cost reduction strategies."

Key survey findings

• Fifty-three percent of all employers and 67% of large employers say they do not plan to drop health benefits. However, based on the potential penalties and recent modeling of potential impact, 22% of all employers said that it is likely that they would consider dropping benefits altogether.
• Of those who say they will drop coverage to avoid the penalty, only about 20% will raise worker salaries to help pay for individual coverage.
• Almost 60% of all employers stated that they will expand wellness programs in light of increased incentives allowed.
• Sixty percent of all employers and 50% of large employers believe the intention of health reform is to eliminate the employer-based system and move to a single-payer system.
• About a third of all employers noted that they have assumed all costs of extending coverage to adult children up to age 26; with one-third responding that the cost of extending coverage has been shared with employees. This reflects a change from April when employers were split 50/50 as to whether they were likely to charge more for dependents as a result of the provision.
• Fewer employers noted that they plan to drop retiree benefits than in April. Of those employers who offer retiree benefits, about a third of large and 12% of small employers will continue to offer benefits, 4% noted that they will drop benefits, and 4% will provide some supplemental plan or contributions to help retirees get coverage.
• The survey indicates that 65% of all employers and more than 80% of large employers have done some modeling on how health reform will impact their benefit costs and 25% of all employers are showing increases of two to five percent, with 15% showing increases of six to ten percent.
• Eighty-six percent of all employers indicated that it's unlikely that current provisions will reduce the rate of health care cost increase and 74% of all employers believe it's likely health reform will boost costs even more than if the legislation was not passed.

Quality and cost provisions

When asked what quality and cost provisions in the law were considered valuable and should be retained, employer responses included: almost 60% want to replace the fee for service with bundled payments; over 45% of all and 52% of large employers want to develop accountable care organizations; more than half want to continue to develop the medical home concept; 55% of all and 70% of large employers want to see development of quality and performance based provider payments; and 62% of all and 74% of large employers want the law to promote the use of value-based designs and incentives to motivate change.

"The survey results reflect employer frustration that cost containment, as their priority goal for health care reform legislation, is not, at present, being realized," said Andrew Webber, president and CEO of NBCH. "While there appears to be strong support for the legislative provisions related to payment reform, value-based insurance design, medical homes, and accountable care organizations, I think employers are signaling the Obama Administration that these delivery reform and value-based purchasing strategies need to be fast-tracked. Cost containment cannot wait."