Most Employers to Keep Health Coverage


Six months after the enactment of major healthcare reform in the U.S., companies seem to be settling into the status quo. Two recent surveys show the majority of employers plan to continue providing health coverage when state exchanges start operating in 2014. A survey of more than 2,800 companies by HR consultancy Mercer found that just 6% of large companies--those with more than 500 employees--say they are likely to stop providing health plans in 2014. The possible falloff is greater among small companies, 20% of which say they are likely to stop providing health plans.

A separate survey of 1,400 companies by the human capital practice of insurance brokerage Willis shows that 55% plan to continue offering health coverage in 2014, even if the new exchanges offer competitively priced individual health coverage. But Willis notes that companies are concerned about healthcare costs, with 88% expecting group health plan costs to rise as a result of healthcare reform and 76% predicting administrative costs will also increase.

Companies aren't the only ones worried about healthcare costs. A Towers Watson survey of more than 9,000 full-time employees at non-government organizations shows that 72% say their employer asked them to pay more for health coverage this year. The survey also shows that just 45% are satisfied with the cost of their health care plan, down from 53% in 2007.

The Mercer survey shows that employers' biggest concern involves the 40% excise tax that will be levied starting in 2018 on the most expensive plans--those that cost more than $10,200 for individuals or $27,500 for families. Twenty-three percent of companies say they'll do whatever it takes to avoid the excise tax, while 37% say they'll try to keep costs below the threshold for the tax but aren't sure that will be possible. Based on current costs, compounded by the 6% annual increases in recent years in healthcare costs, Mercer estimates that 39% of companies with more than 50 workers will be subject to the tax in 2018.

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