What will employers do if health reform is enacted?

It seems like just about everyone has offered their opinions, both pro and con, on the health reform debate. However, one issue that has received scant attention in the ongoing discussion about health reform is: what will the nation’s employers do if health reform legislation were to be enacted into law? Now we know, at least to some extent, thanks to a survey by Towers Perrin, a benefits consulting firm.

Employers say they will not absorb any additional costs that arise from health reform and, in fact, they plan to take action to avoid doing so, according to the survey. Among the steps they’d consider include reducing benefits, raising prices for customers, and/or reducing head count. Towers Perrin surveyed 433 HR and benefit executives from midsize and large organizations.

Even though employers have not been as vocal in the whole health reform process as others, they are closely watching legislative developments in Washington, with 80 percent of surveyed employers monitoring health reform developments. Almost one-fourth (23%) are rethinking benefit changes in light of possible reforms, and almost all of them (89%) expect to reexamine their health benefit strategies for active employees in response to the passage of health care reform legislation.

Cost issues, the Towers Perrin survey determined, will dominate the post-reform world with 90 percent listing cost containment as their most important health reform goal. This should not come as a surprise in light of the 150 percent increase in health care costs employers have faced during the past 10 years.

One interesting issue arising out of the survey is how employers say they would respond to a “pay or play” mandate. Surveyed employers say they would react in the following ways:

• 37% of employers would provide company-sponsored health coverage that substantially exceeds the standard.
• 29% of employers would discontinue company-sponsored health coverage and pay the assessment if the per-employee costs of payments to the federal government were substantially lower than their current costs.
• 26% of employers would provide company-sponsored health coverage at the level of the minimum standard required.

As we learn more, on an ongoing basis, about what might eventually appear in legislation that might actually be voted on by the House and the Senate, it will be interesting to see how employers react.