Many aspects of healthcare reform are expected to boost the costof company-provided healthcare, including the removal of lifetimedollar limits, the pay-or-play requirement, the mandate to offercoverage to adult children and the requirement that companies autoenroll employees. Another source of costs has gotten lessattention: Employers face new fees as a result of the law, and theyare also likely to see cost increases that reflect the fees beinglevied on the providers of healthcare.

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“There's just all sorts of fees,” says Tracy Watts, a partnerand senior health care consultant at Mercer. “This challenge ofcost is huge.”

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Jane Jensen, a senior consulting actuary in the health and groupbenefits practice at Towers Watson, estimates that in 2014, feesmight mean additional costs equal to 1.5% to 2% of plan costs forself-funded plans.

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“These fees will hit organizations in a number of differentways,” Jensen says. “Some phase out and some don't.”

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For example, starting this year, health insurers and sponsors ofself-insured plans will begin paying to fund the Patient-CenteredOutcomes Research Institute created by the healthcare reform law.The research fee starts at $1 per covered life, rises to $2 percovered life in 2013, and ends in 2018.

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From 2014 through 2016, the Health and HumanServices Department will levy a transitional reinsurance programfee on health plans that is expected to raise $25 billion over thethree years. The funds raised will provide insurers withreinsurance for covering high-risk individuals in the start-upyears of state health exchanges.

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Also beginning in 2014, there will be an annual fee imposedpermanently on health insurers that provide fully insured coverage,which is expected to raise at least $17 billion through 2019. A feeon pharmaceutical manufacturers began in 2011 that is estimated toraise $28 billion through 2019, and medical device makers willbegin paying a 2.9% excise tax next year. These fees on healthcareproviders are expected to be passed through to companies thatprovide health coverage.

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“From the employer perspective, we believe that most, ifnot all, of the health industry taxes will be passed through toplans in the form of higher costs and, if you're self-funding,through higher administrative fees from the health plans and feesthat the pharmaceutical and medical device industry will pass on,”says Steve Wojcik, vice president of public policy at the NationalBusiness Group on Health, which represents large employers' viewson health policy.

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Wojcik notes that about half the funding for expanding insurancecoverage via the state exchanges and Medicaid is expected to beraised via taxes on the healthcare industry, employers that providehealthcare and high-income individuals.

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“Taken individually, many of [the fees] are insignificant,” saysWojcik, pictured at right. “But taken together, they add up. Plusthe uncertainty about whether the taxes are going to be increasedin the future, how they're going to be implemented—all of that addsto a climate of uncertainty when companies are trying to nail downtheir costs, including their healthcare costs. It's hard to do thatwhen there's all this uncertainty.”

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Mercer's Watts notes another possible cost: the fines associatedwith not complying with various provisions of the healthcare reformlaw. For example, “willful failure to provide [summaries ofbenefits and coverage] can be penalized with a fine of up to $1,000per person,” Watts says. “We all want to be sure we'recomplying.”

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For a recent story about medical costs, see HealthcareCosts Rising Worldwide. For more on employers and healthcarereform, see Healthcare Reform Next Steps and Employers See Health Reform Risks.

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Susan Kelly

Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.