Jumping to Conclusions: Employer Surveys and the Affordable Care Act
While there has been considerable attention of late focused on the Affordable Care Act and the courts, many states, health care providers, and employers are continuing to move forward on the assumption that the Affordable Care Act will stay in effect—at least in its broadest dimensions. While a Supreme Court decision is now expected by the end of the 2012 term, getting ready for implementation of the major provisions of the ACA that go into effect in 2014 cannot wait for that court decision.
Much has been made about provisions in the Affordable Care Act affecting employers: expansions of benefits, affordability provisions, automatic enrollment requirements, and limited penalties for not offering coverage. Surveys abound, predicting what employers will do as a result of the ACA, and they are wildly different: predicting everything from a significant decrease in the number of employers offering coverage post-reform to a significant increase.
The Affordable Care Act is complex, and many employers know only the well-publicized elements of the law. Most surveys to date have been conducted by asking employers about various future scenarios, and human resource directors have responded based on those scenarios. At best, these surveys are highly speculative. And, even with a deeper understanding of the law and its key provisions, we believe most employers won’t jump to decisions about whether or not to continue offering coverage but will rather take a wait and see approach to see how some of the new structures—like health insurance exchanges—develop over time.
When employers respond, for example, that they would likely drop health benefits as a result of the Affordable Care Act, they may be thinking about only one part of the equation: the current cost of premiums and the likelihood that direct penalties for dropping health coverage will be less than the premiums they pay. But that answer doesn’t take into account what the competition will do, how important health benefits are to attracting a skilled work force, and/or what wage pressure might develop if employers that are currently offering health coverage drop it and encourage employees to purchase their coverage on the Exchange. All of these issues are more complex and will take considerable sorting out by employers.
To help employers better understand the relevant provisions of the ACA, we developed and published a guide called The Affordable Care Act for Midsize and Large Employers. This guide highlights some of the nuances employers will need to consider when thinking about changes they might make to their health benefit plans: nuances such as—how many of their employees are part time, how rich are the benefits they offer today, and how health insurance benefits relate to the average compensation levels of their employees. Our hope is that this guide will inform employers and help them begin to think about the relevant questions as they determine their best future direction for employee health benefits.
The Affordable Care Act will set in place a whole series of changes to the health insurance market place that are interrelated and will lead to some fundamental differences from the ways health coverage is purchased today. How those changes affect the employer market will be an unfolding story over many years. Becoming educated on what those changes are is, however, something all employers can and should do starting right now.