May 20, 2010 / 7:21 PM / in 9 years

U.S. firms see modest health cost hike post-reform

WASHINGTON (Reuters) - Many employers expect to see a slight increase in costs as they work to implement U.S. healthcare reforms for 2011, but nearly one-third are still struggling to figure out what the impact will be, according to a survey released on Thursday.

And while many health insurance companies have moved to implement certain key reforms early amid political pressure, most employers are in no hurry to make such changes, the nationwide survey by workforce consulting firm Mercer said.

Employers, “will get hit hard, harder or less hard by the provisions ... based on their situation,” such as the age and size of their workforce, Beth Umland, Mercer’s research director for health and benefits, told Reuters.

Regulators, insurers and employers are sifting through the $940 billion overhaul of the nation’s healthcare system signed into law by President Barack Obama in March. New rules include extending parents’ insurance policies to adult children up to age 26 and ending lifetime coverage limits.

Roughly 40 percent of employers said they anticipated their costs would rise 2 percent or less next year, while 25 percent expected a 3 percent or higher increase, the survey found.

Some 30 percent said they didn’t know what impact the healthcare law will have, and just 3 percent said their practices already comply with the new law.

Mercer, a subsidiary of Marsh & McLennan Companies Inc, surveyed nearly 800 employers ranging from small to large companies April 27-May 7.

Other concerns were the impact of a tax on high-end insurance policies that offer generous benefits, and the cost of extending health insurance to part-time workers, both required under the law.


A number of reforms in the law won’t be applied for years, but some are set to take effect on September 23.

The Obama administration has called on insurers such as WellPoint Inc, UnitedHealth Group Inc to act immediately to implement extended coverage to young adults and the ban against canceling policies after customers become sick.

But employers who offer insurance — they often self-insure and use insurance companies as administrative payers — are not under such pressure.

The administrative hassle of altering plans mid-year is likely a major hurdle, said Tracy Watts, a Mercer consultant.

“This change is a pretty big deal for employers, with new notification requirements, employee communication and tax implications. Not to mention that it would be an immediate, unbudgeted business expense,” Watts said in a statement.

Still, companies “are not in a blind panic over this,” Mercer’s Umland said. “There’s definitely cost implications, but ... employers are not saying ‘We can’t handle this, let’s get out of the business.’”

Editing by Xavier Briand

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