In survey, employers say health reform will increase costs - somewhat

May 21 2010

"More than 40 percent of employers surveyed by the consulting firm Mercer expect health care reform to raise health care costs by a modest 2 percent or less next year," the Associated Press reports. "A quarter of those surveyed believe reform will add at least 3 percent to their projected costs for 2011, while 3 percent of the employers expect no increase" (5/20).

The survey of 791 employers found that most were worried a tax on high cost health plans - "a rule that doesn't apply until 2018" - would increase the cost of providing benefits to employees, The Kansas City Star reports. "The first two reform mandates that go into effect this year — expanding coverage for child dependents up to age 26 and banning use of lifetime benefit dollar limits in individual plans — emerged as significant concerns for only one-fifth of the employers." (Stafford, 5/20).

Reuters adds: "And while many health insurance companies have moved to implement certain key reforms early amid political pressure, most employers are in no hurry to make such changes." Also, about a third of companies said they did not know what impact the law would have on them. Only 3 percent said they were already complying with the law (Heavey, 5/20).

Business Insurance: "Demographics are a key factor in why costs will vary, said Tracy Watts, a partner in Mercer's Washington office. For example, employers with young workforces likely would have few employees with young adult children, but employers with a high number of employees between age 45 and 60 likely would have many young-adult children. In the wake of the new requirements, some employers already are considering changes to their premium structures. For example, 20% said they will strongly consider changing their premium rate tiers. Many employers now have only two or three premium tiers" (Geisel, 5/20).