2015 Employer-Sponsored Health Care: ACA’s Impact
International Foundation of Employee Benefit Plans
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.
- 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.
- 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.
- 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.
By Don McCanne, MD
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.