1 in 2 employers will continue to offer health insurance even if HIEs are competitive in 2014

JANE SARASOHN-KAHN

Originally published 12/16/2010 on Health Populi.

Just over one-half of U.S. employers plan to maintain their health plans in 2014 even if health insurance exchanges (HIEs) offer competitive priced health plans for individual employee health coverage, according to a survey of 1,400 employers by Willis and Diamond Management & Technology Consultants. 1 in 3 employers is not sure whether they’ll maintain their own health plan or shift employees toward an HIE.

The Health Care Reform Survey 2010 measured U.S. employers’ knowledge of the Affordable Care Act (ACA) and its expected impact on employers’ benefits. 9 in 10 employers (88%) believe that ACA will increase the costs of the health plans with which they contract. As a result, employers generally see taking various actions to constrain health plan costs, as shown in the chart. Among these cost-saving strategies, the most important among employers are to increase cost-sharing for employees and to mandate participation in disease management and employee wellness programs. 42% of employers will also shift more toward consumer-directed health programs (CDHPs), away from traditional health plan models.

Health Populi’s Hot Points: There are several variables that could motivate the 1 in 2 employers who plan to continue to provide benefits in-house in 2014 to move employees outside of the firm toward health insurance exchanges: 1) the cost of health plans that insurance companies bring to employee benefits managers in companies, versus the costs of plans in HIEs (which this survey measured only in terms of “competitively priced plans”); 2) the employer’s profit margins, which allow the company to provide richer or eroding plan benefits; 3) the ability of CDHPs to stem cost increases for employers. If these three factors are favorable for employers, then based on this survey’s findings, they will continue to be in the health benefits game. If one or more of these 3 factors goes south — a stagnant economy, or successful value-priced plans in local HIEs, for example – employers will look to HIEs as the place to outsource employee health benefits.

Jane Sarasohn-Kahn, a health economist and commentator, writes at Health Populi.

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