Employers want cake, and to eat it, too

Employers are still trying to get their arms around what the new health insurance law will mean for them. But on the eve of the law’s passage last month, a survey by Indianapolis-based United Benefit Advisors LLC showed employers as a group had no hope the law would reduce their costs—but also no coherent plan for reforming the current system.

Of the 1,500 U.S. employers surveyed, 52 percent expect the new law to raise health care costs faster than present trends. Another 20 percent think it will keep costs rising as fast as they have been.

Only 28 percent think the new law will slow the growth or reduce the cost of health care.

Employers seem to want to have things both ways, according to United Benefit Advisors' summary of the survey results. Although employers think the new law will make the cost situation worse, only 11 percent of employers supported the new law’s most obvious cost-saving measure: the taxation of expensive, “Cadillac” health insurance plans.

Another example of employers’ conflicting desires is that they want requirements for health insurers to take all comers, but no requirements for individuals or employers to buy health coverage.

A whopping 71 percent approved of the law’s ban against health insurers declining coverage to people with pre-existing conditions. Yet only 27 percent of employers supported the new law’s mandate on employers with 50 or more workers to provide insurance coverage. Even fewer, 21 percent, supported the bill’s tax penalties on individuals who don’t buy health insurance.

Of course, if employers’ demands had been enshrined in law, health insurers have warned they would be flooded by people with illnesses—knowing they cannot be turned away—and shunned by people in good health, who know they can wait to buy insurance until they’re actually sick. The result would be skyrocketing insurance costs.

Health insurers fear a similar result with the new health insurance law because the taxes that will be levied on people who don’t buy health coverage are, in their view, too small to be very effective.

"Employers want to be assured that their employees and their families have protection against the financial burdens caused as a result of having no or inadequate health care, pre-existing conditions and loss of coverage," wrote the United Benefit Advisors staff in a summary of the survey's findings. "Yet, at the same time, they do not support individual mandates for coverage with or without tax incentives/subsidies."
 
The survey was conducted online in February and early March. President Obama signed health insurance reform into law on March 23 and some amendments a few days later.

United Benefit Advisors is a network of benefits brokers and consultants around the country. It has more than 140 member firms, who represent nearly 40,000 employers in North America and the United Kingdom.