A survey of about 800 large and midsize employers by Aon Hewitt in the U.S. has revealed that merely 6% of these employers plan to exit the healthcare system entirely in the next 3 to 5 years. A large majority of the employers in the country plan to play an active role in employee healthcare, by continuing to sponsor healthcare plans. Many employers are planning design changes as well. These intentions; are primarily driven by the steep penalty and related costs being imposed under the healthcare reform law.
While it may seem like an attractive option to an employer to completely exit an active role in employee healthcare, the risks can be overbearing. Large penalties are imposed by the Patient Protection and Affordable Care Act (PPACA) for not offering health coverage to employees. Also, good talent may exit the company for another employer who provides better health coverage. Both of these reasons are strong enough deterrents against the possible benefits that accrue from discontinuation of health benefits.
In fact, the healthcare reform law levies a non-tax deductible penalty of USD 2,000 for each full-time employee for non-coverage. This is applicable to all employers who have 50 or more employees; and hence covers all large and medium sized businesses.
Expected Re-design of Healthcare Plans by Employers
While most employers plan to continue healthcare coverage, they also plan to change the design of the healthcare plan being offered to the employees.
One of the interesting shifts that we may observe; is employers demanding better health management from the employees.
Since long, employers have been trying to find methods to make their employees adopt healthier lifestyles and better discipline in managing illness. But a perfect method for this has remained elusive.
Under the new design, which Aon Hewitt terms it “house money, house rules” and “play by our rules or pay up”, employers will gain greater control over health management by the employees.
So while employers plan to continue covering most of the health costs, in return they will demand that employees utilize better preventive health care, better case management for chronic conditions, and wellness conditions. In fact, almost 40% of the surveyed employers suggested that their health coverage plan will include these terms. For eg., lower premiums for employees who respond to health risk questionnaires or biometric screenings.
While this seems fair, and also seems like it will benefit employees to manage their health better; there is speculation about the ‘big-daddy’ role of employers in the management of their employees’ health. Providing benefits against conditions may be perceived as intrusion or control by the employees. Moreover, the efficacy of such a system to lead to better health management is questionable; and only time will show whether this method actually works and yields desired results without generating reproach from the employees.
Another possible shift is a move towards private health insurance exchanges. About 28% of the employers have suggested that they plan to offer a fixed monetary credit to their employees. The employees can select the insurer through the private health exchange and purchase health coverage from a provider of their choice. This increases flexibility for the employee, lowers future cost trends, and decreases administrative cost and administrative burden on the employer.