Experts: Do Not Rush into Reform Decisions
If one thing can be said about the recent health care reform law, it's that it has generated a barrage of questions for employers.
Will companies drop health care coverage and instead pay the penalty under the Patient Protection and Affordable Care Act (PPACA)? Will they drive their employees into the new state exchanges? Will the Supreme Court rule that the law is unconstitutional, throwing part or all of the law out the window?
The answers, of course, remain unknown for now. In the meantime, employers may want to consider some facts from a number of experts and recent reports about the law's possible impact on businesses and their workers.
End of Benefits? Not So Fast . . .
While conventional wisdom holds that many employers will drop their health benefits in 2014 when the major provisions of PPACA take effect, that decision wouldn't make economic sense for most, according to a new report by the Urban Institute for the Robert Wood Johnson Foundation.
That's because "employers who drop workers' coverage but fail to increase the employees' wages in order to maintain their overall compensation will inevitably lose these employees to competitors," according to a report by National Public Radio.
The law states that employers with more than 50 workers who don't offer benefits in 2014 would have to pay a penalty (ranging between $2,000 and $3,000 per worker). If a company drops coverage, it would need to pay the penalty in addition to boosting wages to offer a competitive overall compensation package. For many employers, that might cost more than sticking with a robust benefit package that will recruit and retain quality employees, the researchers noted.
Switching to Exchanges? Hold On . . .
The proposed state exchanges that would help employees find health care coverage on their own might seem to provide an easy way for companies to dump their health plans while still ensuring that their employees have some coverage.
The drawback of the exchanges, however, is they will reduce an employer's ability to affect worker health and behavior, which ultimately have a significant impact on productivity, said Troyen A. Brennan, an executive vice president with CVS Caremark, in a recent CCH report.
"Do you stay in the driver's seat and proactively manage the health and productivity of your workforce, or do you climb into the back seat and take your chances?" Brennan asked at a recent industry conference. "Absenteeism and productivity go to the bottom line."
Court Rulings? Wait and See . . .
This month, the Supreme Court announced that it would start reviewing cases involving PPACA (likely in February or March). Recently, a federal appeals court in Washington, D.C., upheld a lower court's ruling that the individual mandate created by the law is constitutional. Many observers have noted that until the high court makes a ruling, it's anybody's guess as to the long-term effects of PPACA.