Moving forward: Companies speak out on health care reform3. Assessing the full financial impact of health care reform

Shown: Percentage of respondents
Base: all respondents (669)

Many remain in a holding pattern and have yet to look closely at compliance requirements beyond immediate reforms and the related impact to the bottom line.

Summary: Cost and compliance are key concerns for respondents, but many report that they have not undertaken what they consider to be a full analysis of the financial impact.

Companies are aware of the complex requirements introduced by the health care law, but many remain in a holding pattern and have yet to look closely at compliance requirements beyond immediate reforms and the related impact to the bottom line.

Among those who said their companies have evaluated the impact the health care law will have on the cost of providing coverage to employees:

  • 43% reported that they expect the law to increase costs significantly
  • 49% said they expect the law to increase costs slightly
  • 1% said they expect the law to reduce costs

Three percent said they expect costs to stay the same, and 5% said they did not know what effect the health care law would have on the cost of providing coverage to employees.


Many have not evaluated impact of costs
Have you evaluated the financial impact health care reform will have on the cost ofproviding health care coverage to your employees?


Cost increases expected
If yes, what level of change would you expect?


Identifying challenges and risks
When asked to identify the single biggest challenge or risk stemming from the new law that their company now faces:

  • 34% of respondents cited the impact of health care costs on profitability
  • 31% said the impact of added expenses associated with complying with the health care law

However, 44% of respondents said they have not evaluated what effect the law will have on the cost of employee health benefits.

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To come to terms with the decisions and costs that the health care law raises, there are action steps a company’s leadership can take to be better positioned to avoid risks associated with compliance, remain competitive with peer employers and limit the impact of the law on profitability. These action steps include:

  • Quantifying the impact of the health care law on your company based on:
    • Characteristics and costs of current coverage
    • Your employees subject to the new requirements
    • Demographics of your current employee base
    • Your current and projected retiree population
  • Establishing a compliance timeline for your company
  • Designing an appropriate employee communications approach
  • Prioritizing compliance response based on associated risks
  • Evaluating value and cost of retention of grandfathered status for your company
  • Identifying compliant plan design changes that better absorb anticipated increases in costs
  • Identifying benefit and compensation package modifications that will provide more favorable tax treatment than current structure

The financial impact of the health care law will vary based on a variety of factors, including the benefits currently offered by each employer and the demographics of their employees.

In addition, responsive employers will continue looking for ways to contain their own plan costs by designing benefit programs with an eye to both cost and quality, participating in insurance negotiations with providers, helping workers stay healthy through wellness programs and improving coordination of care for employees with chronic conditions.