Critical Condition

NRO’s health-care blog.

Survey: Employers Will Pass Obamacare Costs onto Employees


Towers Watson, a leading human resources consulting firm, has conducted a survey of 661 human resource and benefit specialists across America. While benefit professionals are still digesting the new law, the survey shows that they are even more skeptical of Obamacare than the public is.

These benefit specialists represent a broad range of industries, and are responsible for choosing health-insurance plans for almost 4 million Americans. If their fears come true, the future of American health care is bleak. Among the highlights:

— 90 percent believe that Obamacare “will increase their organization’s health care benefit costs”;

● 88 percent intend to pass the increases onto employees by increasing employee premium contributions or other cost-sharing measures;

● 74 percent intend to “reduce health benefits and programs” by using stingier health plans, restricting eligibility for health coverage, and using spousal waivers or surcharges.

By a wide margin, employers’ three top priorities for health-care policy are containing health-care costs (96 percent saying it is a high priority); encouraging healthier lifestyles (88 percent); and improving the quality of care (75 percent). Only 25 percent of those surveyed believe that the law will actually encourage healthier lifestyles, and only 20 percent believe it will improve the quality of care.

Another group that will be affected by Obamacare, according to the survey, are retirees, especially early retirees (i.e., those under the age of 65). Seventy-seven percent of employers believe that large companies will reduce or eliminate their retiree health benefits, now that the law prevents insurers from shunning those with preexisting conditions. “Just as many baby boomers are deciding whether to delay retirement, employers will be determining if it makes financial sense for them to remain in the retiree medical business,” said Dave Osterndorf, a senior consulting actuary at Towers Watson. The preexisting condition mandate “will likely accelerate employers exiting sponsorship of retiree health programs.” Naturally, the more that employers opt out of sponsoring their retirees’ health benefits, the more that the government will end up picking up the tab.

On the bright side, 58 percent of employers said that the rising cost of health insurance would lead them to replace their existing health benefits with consumer-driven health plans (assuming that Obamacare doesn’t outlaw them). Seventy-four percent said that they do not plan to discontinue health coverage for their active employees, though “it’s something you want to monitor over time,” said Mark Maselli, head of the Towers Watson group that conducted the study.

Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co., and blogs on health-care policy at the Apothecary.


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