Wednesday, October 27, 2010

Human Resource Officers Anticipate Health Reform Will Lead To Higher Costs

The potential for increased cost-shifting to private payers, the health insurance exchanges operating effectively in all states by 2014, and the elimination or revision of the tax on high cost plans are the issues of greatest concern about the new health reform law of chief human resources officers (CHROs) at large firms. Furthermore, nearly all (96%) of the more than 250 CHROs the HRPolicy Association surveyed in September 2010 believed that the Patient Protection and Affordable Care Act (ACA) will raise their companies' costs: 56% of these expect an increase of 5% or less; 27% expect a 6% to 10% increase; and 19% anticipate increases of more than 10%.

In response to increased costs, 64% of the CHROs predicted that their companies would split costs with their employees and retirees, and 19% said they would pass on the costs to their employees.

In addition, CHROs believed that a much greater number of employees than Congress anticipated will obtain health coverage though the new state exchanges, and receive the federal subsidy, than will remain in their employers' plans. The trend will be away from employer-sponsored coverage over the next ten years --about one-third (34%) of the CHROs said their company was likely to provide employer-sponsored coverage in 2020, while one-fifth (19%) said not likely, but nearly half (47%) were not sure. This will end up costing the federal governmdnt far more than planned, the CHROs predicted.

Employers want true health reform, not repeal of the new law, the CHROs said --56% see the need for major "adjustments" to the ACA, but only 3% are in favor of outright repeal with no further attempts at reform. In addition, members support the delivery systems and payment reform projects of the ACA. The CHROs feel that the ACA does not bend down the cost curve because health coverage is expanded without taking steps to change the way care is delivered.

The report further found that "Association members believe another attempt at reform is inevitable, and they are ready to work with Congress on future iterations to ensure that health reform will lead to a sustainable, high quality health care system providing coverage for all Americans while promoting the competitiveness of U.S. employers."

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For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

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