Employers and Health Reform

Employers must often wonder how they got themselves into the mess of providing health insurance to employees and dependents.  The cost of providing health benefits is an ongoing issue and partly because of the cost of health care, health insurance is one of the most highly valued benefits for employees.  A new Towers Watson survey of over 400 mid-sized and large companies with more than 8.7 million workers shows that employers are still trying to feel their way through the new health benefits world created by reform.   (TW Survey)   Almost all of these companies plan to retain their health benefits for active employees, but 25% said they are considering discontinuing coverage for Medicare eligible retirees in 2014 and 44% said they would consider it for 2015.  For pre-age 65 retirees, 10% said discontinuance was an option for 2014 and 38% said it would be for 2015.  The availability of exchange coverage is undoubtedly emboldening employers to consider how they reduce the number of people they are paying for.  Another trend along the same lines is more limitations on spouse and dependent coverage, with many considering reducing or eliminating such coverage or hiking the employee share to retain dependents on the plan.  UPS’ recent action in this regard is illustrative of the actions employers will be taking.  Many employers are already focused on the excise tax that will kick in in 2018 for high-value plans, and are working to reduce benefits and increase cost-sharing to avoid that tax; another trend that doesn’t help employees.  Interest in private exchanges is high, trust in public ones, low.  Other areas of heightened activity include wellness and health improvement; identification and reward of high-performance, low-cost providers and value-based insurance designs.  Overall, it is a challenging landscape for employers and even more so for their workers.