Willis Survey: Health Care Reform Driving Up Health Plan Costs for Employers
Organizations Drop Grandfathered Status to Control Costs, Many Waiting to Take Action with EmployeesBroker Publishes 2012 Health
Care Reform Survey
NEW YORK, March 8, 2012 – Compliance with health care reform is already driving up costs for
some employers’rsquo; group health plans, and a majority of employers expect price increases to be passed
on to employees, according to a health care reform survey released today by the Willis Human
Capital Practice, a unit of Willis Group Holdings (nyse:WSH), the global insurance broker.
While only about a quarter of the responding employers have quantified the cost of compliance within their
health plans, a majority (nearly 56 percent) of those employers said the cumulative cost amounted to
an increase in cost; over 15 percent noted that the cost increase was between two and
five percent, and over 15 percent said that the cost increase was more than five percent.
Employers report that their most significant cost drivers are the provision of adult child coverage
up to age 26 and the removal of the annual/lifetime limits for “essential health benefits.”
The Health Care Reform Survey 2012, available here, outlines employers’ perceptions regarding the Patient Protection and
Affordable Care Act (PPACA) and planned responses to health care reform measures. In addition, the
survey provides a current snapshot about what actions employers believe other employers will take in response
to health care reform.
The survey represents the findings from a significant population, including more than 2,300 employers of varying sizes,
industry sectors and geographic regions.
Key findings from the survey include:
Employers expect that similar employers will pass increased costs on to employees: More than half of the
responding employers felt that other, similar employers would pass more of the cost for dependent coverage
on to their employees. One-third of respondents thought other, similar employers would reduce coverage to the
lowest-cost package to avoid the “pay-or-play” penalty, and a majority of employers also thought that wellness
programs would be expanded in scope. Finally, nearly two-thirds of the employers expected that employee
contributions would be increased.
Employers are waiting to communicate health care reform changes to employees: Within the next 12 months, 40
percent of employers will be reviewing their strategies for internally communicating benefit rewards.
Only one- third of employers have maintained grandfathered status despite a desire to remain grandfathered: The rate
at which respondent employers have lost grandfathered status has far out-paced the Department of Health &
Human Services’ expectations for 2012. The accelerated loss of grandfathered status suggests that employers have had
to make many plan changes to offset cost increases, and perhaps employers have been more willing
to give up grandfathered status in order to take other steps to control costs.
“Now that the health care reform act has entered the implementation phase, the costs and benefits associated
with the act are coming into greater focus for employers,” said Jay Kirschbaum, Practice Leader -
National Legal and Research Group, Willis Human Capital Practice. “The survey suggests employers realize that
costs of providing medical benefits will increase and that they will likely have to pass those
costs on to their employees.”
“The survey also suggests that, despite the increased costs, employers continue to value providing medical benefits to
their employees and do not plan to eliminate that benefit but are considering the possibility that
the state exchanges will provide a potential option. Respondents also indicated the new requirements will force
them to think about their benefits in a strategic manner and as part of the total
rewards they use to attract, retain and motivate employees,” Mr. Kirschbaum said.
The survey was conducted between Dec. 8, 2011 and Dec. 19, 2011.
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers
professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public
entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries,
with a global team of approximately 17,000 employees serving clients in virtually every part of the
world. Additional information on Willis may be found at www.willis.com.