qotd: Impact of ACA on employers and their employees

International Foundation of Employee Benefit Plans
2015 Employer-Sponsored Health Care: ACA's Impact

On March 26, 2015, the International Foundation of Employee Benefit
Plans deployed its sixth survey in a series on how single employer plans
are being affected by the Affordable Care Act (ACA).

From the Key Findings

Health Insurance Exchanges

* Ninety-four percent of all surveyed organizations continue to provide
health care coverage for all full-time employees in 2015 and, among that
group, nearly all plan to continue coverage in 2016. Respondents
overwhelmingly chose three reasons for maintaining coverage: to attract
future talent, retain current employees and maintain/increase employee
satisfaction and loyalty.

* Less than 5% of organizations provide coverage to full- or part-time
employees through private health insurance exchanges. However, more than
one in ten organizations that provide coverage to retirees aged 65 and
older are doing so via private exchanges, and 17% more are considering
doing so.

Cost-Containment Strategies

* More than one-third of organizations now have increased out-of-pocket
limits, in-network deductibles and/or participants' share of premium
costs in response to ACA. More than one in five organizations have
increased copayments or coinsurance for primary care, increased
participants' share of prescription drug costs and/or increased the
employee proportion of dependent coverage cost.

* One in five organizations has adopted or expanded wellness
initiatives because of ACA and another 17% plan to do so in the next 12
months.

* Fifteen percent of organizations have adjusted hours so fewer
employees quality for full-time employee medical insurance.

Cadillac Tax

* The excise tax on high-cost group health plans (a.k.a. Cadillac tax)
is considered the top ACA cost driver beyond 2015. Since 2011, a
steadily increasing percentage of organizations has taken action to
avoid triggering the excise tax — a trend likely to continue. More than
one in ten organizations already have adopted changes to prevent them
from triggering the tax, 21% are working on changes and 28% plan to act
sometime prior to 2018. Only one-quarter said changes were not necessary
either because they have no high-cost plans (23%) or because they plan
to pay the tax (2%).

* The most common action taken to avoid triggering the excise tax is
moving to a consumer-driven health plan (CDHP). In particular, more than
one-quarter of all responding organizations have increased emphasis or
added a high-deductible health plan (HDHP) with a health savings account
(HSA) because of ACA, and an additional 14% are considering doing so.
Nearly one in ten organizations has adopted a full-replacement HDHP
because of ACA.

Cost Impact

* Two-thirds of organizations have conducted an analysis to determine
how ACA will affect 2015 health care plan costs. Among all
organizations, 82% expect the law will increase their organization's
health care costs this year, with most projecting a 1% to 6% increase.
The median cost increase is 3% among organizations that know their exact
2015 cost change because of ACA. However, ACA-related costs are hitting
smaller employers much harder than larger ones. General ACA
administrative costs and costs associated with reporting, disclosure and
notification requirements are the top ACA cost drivers for 2015.

https://www.ifebp.org/pdf/research/aca-impact-survey-2015.pdf

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Comment by Don McCanne

This is yet one more highly credible report that indicates that the
quintessence of health insurance coverage - employer-sponsored health
plans - is deteriorating.

Most of the changes are responses to the very high costs of health care.
Employers are shifting more of the costs to employees through much
higher deductibles, higher copayments and coinsurance, higher premium
contributions, higher shares of drug costs, and an increase in
contributions for dependent coverage. This trend began before the
Affordable Care Act (ACA) was implemented. ACA actually has very few
provisions that lead to major cost increases, except that most employers
complain of increased administrative costs associated with compliance
with ACA.

Another exception where ACA does play a consequential role for employers
is the excise tax that will be assessed on plans with higher premiums.
The tax will be significant, and so employers are already taking action
to keep insurance premiums below the threshold at which the tax will be
assessed. The most common action being taken is to move employees into
consumer-driven health plans - high deductible health plans with or
without health savings accounts.

Innumerable studies have confirmed that high-deductible health plans
both impair access and increase the risk of financial hardship, so they
have a negative impact on both the health security and the financial
security of the employees.

Some employers understand that an improved Medicare that covered
everyone - a single payer national health program - would ensure
accessible and affordable health care for all of their employees, while
eliminating the headache of having to administer their health benefit
programs. It is too bad they are not joining together to advocate for
single payer. It just seems like the logical thing to do.