Healthcare Costs Weigh Heavily On CFOs

One-year postponement of the employer mandate won’t alter the outlook for costs in 2014.

Healthcare costs remain the top concern of CFOs, according to a recent survey, and the Obama administration’s decision to give companies another year to comply with the requirement to provide insurance for all full-time workers isn’t likely to improve the outlook for next year’s cost increase.

Last month, the government announced that the employer mandate of the Affordable Care Act (ACA)—which says companies must offer health coverage to all employees who work 30 hours a week or more, or else pay a penalty—has been delayed until 2015. That postponement gives companies more time to rework their healthcare offerings. But they still face higher costs in 2014 related to fees and other plan changes mandated by the ACA, as well as the possibility that more employees who are already eligible for health coverage will sign up as the law’s individual mandate kicks in.

Steve Wojcik, vice president of public policy at the National Business Group on Health (NBGH), an organization that represents large employers on healthcare issues, argued that companies will also start to see higher costs next year as healthcare providers like hospitals and doctors charge private payers more to offset the smaller payments they get to treat individuals covered by Medicaid or through public exchanges. “We call it shifting revenues to private payers, especially employers and others who are more generous in terms of paying for care,” Wojcik said.

Tracy Watts of MercerA Mercer database that tracks negotiated network arrangements between insurers and their customers does not show any upward pressure from such shifts, said Watts, pictured at left. But she added, “As Medicaid grows, that could certainly put pressure on the system.” She doesn’t expect that kind of pricing pressure from the public exchanges, though. “From what I’ve seen so far they are going to advantage their costs through more narrow networks or their plan design features,” Watts said.

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