Benefits Business

Health care reform

What are the implications for employers as well as their employees?

By Len Strazewski

If health care reform legislation really works, it could change the shape of the employee benefits marketplace—and create a whole new broad-based market for individual health insurance. Tax incentives and subsidies, loosening of restrictive health insurance industry practices and state-based insurance exchanges will lower the costs of individual health care policies; and the new federal mandate will drive individuals into the marketplace to take advantage of the new opportunities.

Large employers may modify coverage to take advantage of the legislation and avoid penalties, and small businesses may find the marketplace so receptive that they will offer health coverage for the first time.

Really? The latest survey research and a powerful new legal challenge suggest that agents should not believe the hype—at least not yet. Even though the Patient Protection and Affordable Care Act presents an increase in coverage options for individuals not covered by employee benefits and more tightly regulates coverage for employed individuals, it is not clear that the law will change very much.

Organizations representing both large and small businesses find the reform provisions lacking in value for their membership and say that what they have already been offering is more on the right track to improving overall health and wellness.

According to a new survey conducted by the Washington-based National Business Group on Health (NBGH) that represents 280 large employers and consultant Hewitt Associates, most working individuals plan to continue to rely on their employer-provided health benefits. Only about one-third of survey respondents said they would consider dropping health benefits if they could buy similar coverage on their own.

The survey, conducted in March 2010, polled more than 3,000 employees and their dependents. It found that the majority of employed Americans—about 61%—use their employee benefits health plans when medical needs occur and participate in employer-sponsored wellness and healthy living programs.

Nearly half—47%—said they plan to continue to use their employee benefits plan coverage for at least the next three to five years, despite new options available under the reform legislation. About 35% said they would consider dropping their employer’s coverage—but only if they could buy similar coverage that is less expensive and which offers new options.

“Workers clearly appreciate the value of the health care coverage their employers offer to them and their families,” notes NBGH President Helen Darling, “Health care reform legislation will lead some employers to rethink their health benefits strategy, but employees overwhelmingly prefer and expect to see their employers continue to provide coverage in the future.”

The survey identified five trends that indicate that employers are likely to continue their present health benefits strategy—and show that agents who have been promoting sophisticated health strategies are already on the right track.

• Employees know how to get healthy, though many aren’t taking the actions they know will work. The survey indicates that wellness messages are getting through to employees. About 84% of survey respondents say they believe making smart choices in daily life leads to better health, and about 72% say good health is a result of getting regular preventive care.

But there is still plenty of work to be done in completing the circuit from knowledge to action. Only about half say they are doing a good job of eating “healthy” and consuming less, while 45% say they exercise regularly.

• Although participation in health and wellness programs is relatively low, among participants satisfaction is high. Strongest participation is in biometric screenings, which are often supported by premium incen­tives (61%), online health information tools and programs (53%) and health risk questionnaires (41%). Employee Assistance Programs (EAPs) and stress management pro­grams are the least popular with less than 10% participation.

Programs that are popular with participants are blood screenings (91% expressing satisfaction), on-site health centers (83%) and physical fitness programs (78%).

Self-motivation can be as valuable as financial incentives. Nearly half of respondents—48%—said they would complete a health risk questionnaire without a financial incentive, and 44% would participate in a wellness or health improvement program because “it is the right thing to do.”

• Workers want targeted and personalized communication. About 44% of respondents want customized and targeted benefit communications, based on age and gender, and about 41% want personalized health recommendations. About 40% want access to online health records.

• Confusion and skepticism get in the way. A majority of employees and their dependents—58%— remain confused about which information to trust and what to do about their health. More than half—54%—are confused about what is covered by their plans, and 47% say they are held up by not knowing how much what services cost.

These concerns, however, are fixable by employers as they continue to refine their employee benefit plans, Darling notes.

“Workers know what they need to do to manage their health, but unfortunately that’s not enough,” Darling says. “To turn this knowledge into positive actions, individuals need very specific tools, tactics and motiva­tions. As employers consider making changes to their health care benefits in response to health care reform, they have a great opportunity to revitalize their existing strategy and create programs that will promote workforce health and productivity and hold down overall health care costs.”

The same opportunities to improve health improvement response may not be available under individual plans with disparate plan provisions and a lack of centralized leadership and direction.

Small employers that are less likely to offer health plans or wellness programs with coverage also find the law to be a big obstacle to their success and, among some groups, a violation of their rights. Now the law itself faces legal challenges.

In May, the Washington-based National Federation of Independent Business (NFIB) joined 20 state govern­ments in a lawsuit that challenges the constitutionality of the law.

Dan Danner, NFIB president, says opposition to the law is justified, based on comments from his organization’s small business membership. “Small business owners everywhere are rightfully concerned that the unconsti­tutional new mandates, countless rules and new taxes in the health care law will devastate their business and their ability to create jobs. They are also concerned about their personal freedoms. This law is the first time the federal government has required individuals to purchase something simply because they are alive. If Congress can regulate this type of activity, then there are essentially no limits to what they can mandate individuals to do.”

Small employers have continued to oppose the law for less lofty reasons as well, including financial penalties for not providing or subsidizing coverage and new administrative burdens for tracking compliance.

The author
Len Strazewski is employee benefits columnist at Human Resource Executive magazine. He has an M.S. in Industrial Relations from Loyola University in Chicago.