With hikes like that, as reported by the Kaiser Family Foundation and Health Research & Educational Trust, it's little wonder that employer-sponsored health benefits are under the microscope. Not only have costs risen, but coverage has declined with employees increasingly shouldering higher deductibles and co-pays.
The question is will federal health care reform make the situation worse or better? Two reports offer conflicting scenarios: A Robert Wood Johnson Foundation study suggests coverage will rise and premiums will fall. A survey by the consulting firm McKinsey & Co. suggests 30 percent of employers will likely stop offering coverage.
Employers are in a holding pattern, says Adrienne Rupp, vice president of communications for the Business and Industry Association of NH. It seems a lot of employers are still confused about federal health care reform. It's partly a lack of knowledge, but it's also uncertainty about what might happen, she says. For now, they are responding by increasing cost sharing and deductibles, she says of feedback they received from a focus group of larger employers in April.
Key facets of the law include allowing young adults to stay on their parents' plans, providing free preventative care and small business tax credits for employers who provide coverage. One major facet, competitive health care exchanges where individuals and small businesses can shop for coverage, takes effect in 2014.
Smaller employers, those with fewer than 50 employees, are more focused on what health care is costing them now than on policies that won't take effect for another two and half years, says Jim Scammon, executive vice president of Granite Group Benefits in Manchester. The major components of federal health care reform, which take effect in 2014, are too far off to concern them. From my perspective, it doesn't matter what happens with health care reform because we already have smaller employers contemplating dropping coverage because they can't afford it, he says.
He says larger employers are asking him what would happen if they dropped coverage, as a hypothetical, taking into account the penalties that would apply. The equation, he says, is complex. On a straight dollar basis it's going to be less expensive to pay the penalty, Scammon says. Then we walk them through, if you don't offer benefits and your competitors do, what's that going to mean?' Are you going to have to increase salaries, which then has implications on payroll taxes and workers' compensation costs it's not as simple as are the penalties less expensive'.
Insurers say it's too soon to say what employers will do, mostly because the details of the exchange-the major alternate option for purchasing coverage-have not yet been worked out. Lisa Kaplan Howe, the policy director for the nonprofit NH Voices for Health, says the law has potential to help. As of now, small businesses with between two and 25 employees and with average wages under $50,000 receive a 35 percent tax credit when they provide insurance coverage, and Howe says that jumps to 50 percent in 2014. In addition, an exchange that is transparent about costs would make it easier for small insurers to complete based on the value they provide. So hopefully it will incentivize more insurers to come into NH.
Current Issue - April 2024