U.S. employers prefer cautious approach to healthcare reform

The survey respondents were asked to assign high-, medium- or low-priority ratings to 11 components required for a comprehensive health reform system. The elements included mandates for individuals and employers, changes in tax treatment of employer-sponsored health coverage, investments in improving quality and cost efficiency, creating new public health insurance plans and exchanges, insurance market reforms and expanding eligibility for coverage under existing public programs

“Increase incentives to improve health care quality and efficiency, such as by adopting provider pay for performance and health information technology” was the reform element selected as a high priority by the most respondents (60%).

The results indicate that “employers are signaling strong concern over the initial cost estimates for implementing healthcare reform,” says Linda Havlin, a worldwide partner at Mercer. “Uncertainties about how and when employers will emerge from the recession have heightened their concern about the unknown cost impact of a complex industry restructuring effort.”

“Putting health reform aside, quality improvement is the best option employers have for controlling the trend of rising costs,” she adds. “Government can support this need through funding and aligning government-sponsored programs with private sector initiatives. Improving quality encompasses building more credible databases for evaluating provider performance, paying providers for outcomes, improving patient compliance, continuing support for electronic medical record adoption, improving coordination of care for people with complex illnesses and increasing primary care resources, particularly for underserved locations.”

Second on the survey respondents’ list of high priorities was to “enact insurance market reforms, including requiring insurance companies to offer individual coverage and eliminating pre-existing condition exclusions and lifetime benefit limits.” Fifty per cent of respondents cited this as a high priority.

Employers remain opposed to limits on the favorable tax treatment of employer-sponsored health benefits (59%) and a mandate for employers to offer coverage (52%). But their responses were less uniform when asked how they would react if a hypothetical reduction in the current tax exclusion for employer-sponsored coverage resulted in an average increase of $3,000 in taxable income to their employees. About a fifth said they would be “very likely” to change the plan or reduce the level of benefits provided to avoid the increase, while another fifth indicated they would be very likely to make no change and let employees absorb the higher tax bill. Only 3% said they would be very likely to discontinue offering a health plan.

Limited support for alternatives
The survey indicated there is no clear consensus on several aspects of reform legislation that would potentially increase cost and regulatory requirements. Such elements include increasing dependent eligibility to age 26, individual coverage mandates, expansion of Medicaid eligibility and subsidies and the creation of insurance exchanges and navigators, which would be new government structures.

Despite the considerable media attention given to the creation of a public health plan, just 24% of all respondents said they consider it a high priority for reform.

“The public plan has emerged as a contentious issue,” Havlin says. “Health plans are concerned that the public plan’s ability to use government rates for paying providers will make it impossible for them to compete against the plan and that it will potentially set a course for a single-payer system. Providers are concerned about having a higher percentage of their patient revenue based on government rates. Employers are concerned about the potential for more cost shifting if they retain private plans.”

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