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Shrm health-care-reform-impact-costs-coverage

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Shrm health-care-reform-impact-costs-coverage

  1. 1. SHRM Survey Findings: Health Care Reform—Impact on Health Care Coverage and Costs June 16, 2013
  2. 2. • This is the second part of a two-part survey findings about the impact of the Patient Protection and Affordable Care Act (PPACA) on organizations. This section looks at current and future health care coverage benefits, expected future costs of health care coverage and the impact of the PPACA on employee benefits. 2013 data are compared to the 2010 and 2011 data where applicable. The results are broken into the following sections:  Health Care Coverage.  Health Care Costs.  Future Impact of the PPACA.  Demographics. • Part one, “Health Care Reform—Challenges and Strategies,” examines the challenges that human resource professionals are facing and the strategies they are using to handle the new regulations. • Additional SHRM resources on health care reform are available at shrm.org/healthcare Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 2 Introduction
  3. 3. • To which groups are organizations currently offering health care coverage? The vast majority of organizations offer health care coverage to full-time employees (99%), dependents of employees (92%) and the spouse of employees (92%). Currently, 39% of organizations offer coverage to part- time employees, which will reportedly increase to 46% in 2014. Coverage for domestic partners of employees is offered by 43% of organizations.  Larger organizations are more likely than smaller organizations to offer health care coverage to part-time employees and domestic partners of employees. • How many hours per week do employees need to work to be eligible for health care coverage? Currently, 39% of organizations require 30 hours per week to be eligible for coverage. This percentage will increase to 60% in 2014 when the PPACA Employer Mandate becomes effective, whereas the percentage of organizations requiring more than 30 hours per week will decrease from 33% to 13%. About one-quarter (28%) currently offer health care coverage to employees who work less than 30 hours.  Larger organizations are more likely than smaller organizations to currently offer health care coverage to employees who work less than 30 hours per week. • How do organizations fund their primary medical benefit? Just over one-half of organizations have a fully insured medical benefit (52%), and 48% are self-insured.  Larger organizations are more likely than smaller organizations to be self-insured.  Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and government organizations to be self-insured. • Are organizations following nondiscrimination rules? The majority (88%) of organizations are currently following nondiscrimination rules, and 11% are waiting for more guidance. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 3 Key Findings: Health Care Coverage
  4. 4. • Did organizations receive medical loss ratio rebates in August 2012? One out of five organizations (21%) received medical loss ratio rebates in 2012. About two-thirds of those organizations distributed either a portion (40%) or the full amount (28%) of those rebates to employee participants in the plan. Twenty-one percent applied the rebate toward future participant premiums, and 11% applied it toward other benefit enhancements. • How do organization expect the PPACA to affect health care coverage costs in 2014? The majority (84%) indicates costs will increase, 15% expect no change, and 1% foresee a decrease in costs. Of those expecting increased costs, over one-half (55%) predict a 1% to 10% increase, 19% forecast an 11%-15% increase, and one-quarter (26%) expect an increase of 16% or more.  Generally, smaller organizations expect a greater increase in costs compared with larger organizations. • If organizations have increased or decreased health care coverage costs in 2014, do they plan to pass them to their employees? Most organizations (83%) are likely or highly likely to pass on increased costs to their employees, and about one-half (51%) are likely or highly likely to pass on cost savings to their employees.  Smaller organizations are more likely than larger organizations to be highly likely to pass cost savings on to employees.  Privately owned for-profit organizations are more likely than publicly owned for-profit organizations to be highly likely to pass on increased health care coverage costs to employees.  Publicly owned for-profit organizations are more likely than organizations in other sectors to be likely to pass on increased health care coverage costs to employees. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 4 Key Findings: Health Care Costs
  5. 5. • Are organizations concerned about losing employees through voluntary turnover when the public exchanges become available? Sixty-nine percent of organizations are not concerned that the availability of public exchanges will affect voluntary turnover, and one-quarter (26%) are somewhat concerned. Few organizations (5%) are very or extremely concerned. • How will the level of health-related employee benefits change as a result of the PPACA? Two- thirds (66%) of organizations anticipate they will offer the same level of benefits, and 23% expect to decrease their benefits offerings. Eleven percent of organizations expect increased or improved health benefits. • How will the level of nonhealth-related employee benefits change as a result of the PPACA? The majority (85%) of organizations indicate that nonhealth-related benefits (e.g., financial benefits, retirement benefits, leave benefits) would remain at the same level. One out of 10 (10%) expect a decrease in nonhealth benefits, and 5% anticipate an increase in the level of benefits. • What type of nonhealth benefits would organizations reduce or cut? Of organizations that expect a decrease in nonhealth benefits, 45% would reduce financial and compensation or retirement savings and planning benefits. Two out of five organizations (40%) indicate they would reduce employee programs and services. About one-third (34%) would reduce leave benefits. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 5 Key Findings: Future Impact of the PPACA
  6. 6. • It is important to have a communication strategy in place to explain 2014 health benefits, especially for employees who will be newly eligible for health care coverage. An increasing number of organizations will be providing health care benefits to part-time workers and reducing the number of hours required to be eligible for coverage. Therefore, some organizations are likely to have more first-time enrollees in their health care program who may not be familiar with benefits offerings and enrollment procedures. • As most organizations expect health care cost increases in 2014 due to the PPACA, actions need to be taken now to prepare for the impact of these costs. Organizations should consider evaluating their overall employee compensation and benefits package as they think about changes to health and nonhealth employee benefits. Almost one-quarter (23%) of organizations expect that they will have decreased health benefits as a result of the PPACA, and 10% expect a decrease in nonhealth benefits. It will be important for organizations to strategically implement benefits changes that have an impact on recruitment and retention of employees. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 6 What do these findings mean for the HR profession?
  7. 7. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 7 Health Care Coverage
  8. 8. To which groups does your organization offer health care coverage? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 8 Note: n = 731. Percentages do not equal 100% due to multiple response options. 1% 44% 46% 90% 91% 99% 1% 43% 39% 92% 92% 99% None, our organization does not offer employee health care coverage Domestic partner of employee Part-time employees Spouse of employee Dependents of employee Full-time employees Current coverage 2014 coverage
  9. 9. To which groups does your organization currently offer health care coverage? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 9 Note: Only statistically significant differences are shown. Comparisons by organization staff size: Part-time employees 500 to 2,499 employees (49%) 2,500 to 24,999 employees (61%) > 1 to 99 employees (19%) 100 to 499 employees (33%) Comparisons by organization staff size • Organizations with 500 to 24,999 employees are more likely than organizations with 1 to 499 employees to currently offer health care coverage to part-time employees. Comparisons by organization staff size: Domestic partner of employee 2,500 to 24,999 employees (60%) 25,000 or more employees (77%) > 1 to 99 employees (35%) 100 to 499 employees (40%) 500 to 2,499 employees (41%) • Organizations with 2,500 or more employees are more likely than organizations with 1 to 2,499 employees to currently offer health care coverage to employees’ domestic partners.
  10. 10. How many hours per week do employees need to work to be eligible for health care coverage? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 10 n = 699 13% 60% 27% 33% 39% 28% More than 30 hours 30 hours Less than 30 hours Current coverage 2014 coverage
  11. 11. How many hours per week do employees need to work to be eligible for health care coverage? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 11 Note: Only statistically significant differences are shown. Comparisons by organization staff size: Less than 30 hours per week 500 to 2,499 employees (37%) 2,500 to 24,999 employees (49%) 25,000 or more employees (55%) > 1 to 99 employees (16%) 100 to 499 employees (18%) Comparisons by organization staff size • Organizations with 500 or more employees are more likely than organizations with 1 to 499 employees to currently offer health care coverage to employees who work less than 30 hours per week.
  12. 12. How is your organization’s primary medical benefit funded? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 12 n = 617 Fully insured, 51% Self- insured, 49% 2014 Fully insured, 52% Self- insured, 48% Current
  13. 13. How is your organization’s primary medical benefit funded? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 13 Note: Only statistically significant differences are shown. Comparisons by organization sector • Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and government organizations to currently have a self-insured primary medical benefit. Comparisons by organization sector: Self-insured Publicly owned for-profit (71%) > Privately owned for-profit (37%) Nonprofit (38%) Government (50%) Comparisons by organization staff size: Self-insured 500 to 2,499 employees (64%) 2,500 to 24,999 employees (80%) 25,000 or more employees (86%) > 1 to 99 employees (12%) 100 to 499 employees (30%) Comparisons by organization staff size • Organizations with 500 or more employees are more likely than organizations with 1 to 499 employees to currently have a self-insured primary medical benefit.
  14. 14. Is your organization currently following nondiscrimination rules for your health care plan? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 14 Note: n = 403. Only respondents whose organizations had fully insured primary medical benefits were asked this question. 1% 11% 88% No, but for other reasons No, we are waiting for more guidance Yes, we are currently following nondiscrimination rules Nondiscrimination Rules: Under the PPACA, employers subject to the new nondiscrimination provisions must refrain from discriminating in favor of highly compensated employees with regard to health benefits. The Internal Revenue Service has delayed enforcement of these new rules until regulations or further guidance has been issued.
  15. 15. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 15 Health Care Costs
  16. 16. Did your organization receive any medial loss ratio rebates in August 2012? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 16 n = 568 Yes, 21% No, 79% Medical Loss Ratio Rebates: These rebates were mandated under the PPACA whenever health insurers did not spend at least a certain percentage (generally, 80% to 85%) of the prior year’s health insurance premiums on health care services. The rebates received in August 2012 covered premiums collected for the 2011 plan year.
  17. 17. What did your organization do with the medical loss ratio rebates received in August 2012? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 17 Note: n = 117. Only respondents whose organizations received medical loss ratio rebates were asked this question. Percentages do not equal 100% due to multiple response options. 5% 11% 21% 28% 40% Other Applied the rebate toward other benefit enhancements Applied the rebate toward future participant premium payments Distributed the full amount of the rebate to employee participants in the plan Distributed a proportion of the rebate to employee participants in the plan
  18. 18. In 2014, as a result of the PPACA, do you expect your organization’s overall health care coverage costs to increase, stay the same or decrease? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 18 n = 625 Increase, 84% Stay the same, 15% Decrease, 1%
  19. 19. In 2014, how much do you expect your organization’s health care costs to increase? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 19 Note: n = 490. Only respondents whose organizations expected increased costs in 2014 were asked this question. 26% 19% 40% 15% 16% or greater increase 11%-15% increase 6%-10% increase 1%-5% increase
  20. 20. In 2014, how much do you expect your organization’s health care costs to increase? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 20Note: Only statistically significant differences are shown. Comparisons by organization staff size: 1%-5% increase 2,500 to 24,999 employees (26%) > 1 to 99 employees (9%) 100 to 499 employees (12%) Comparisons by organization staff size • Organizations with 2,500 to 24,999 employees are more likely than organizations with 1 to 499 employees to expect their health care costs to increase by 1% to 5%. Comparisons by organization staff size: 11%-15% increase 100 to 499 employees (26%) > 2,500 to 24,999 employees (7%) • Organizations with 100 to 499 employees are more likely than organizations with 2,500 to 24,999 employees to expect their health care costs to increase by 11% to 15%. Comparisons by organization staff size: 16% or more increase 1 to 99 employees (38%) > 500 to 2,499 employees (18%) • Organizations with 1 to 99 employees are more likely than organizations with 500 to 2,499 employees to expect their health care costs to increase by 16% or more.
  21. 21. How likely is your organization to pass on to employees any increased or decreased health care coverage costs? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 21 Note: Percentages may not total 100% due to rounding. Respondents who answered “don’t know” were excluded from these analyses. 18% 32% 33% 51% 33% 13% 16% 4% Decreased costs (i.e., cost savings) (n = 587) Increased costs (n = 618) 2014 Highly Likely Likely Unlikely Highly unlikely 13% 30% 38% 54% 31% 13% 19% 3% Decreased costs (i.e., cost savings) (n = 650) Increased costs (n = 619) 2011 Highly Likely Likely Unlikely Highly unlikely
  22. 22. How likely is your organization to pass on to employees any decreased (i.e., cost savings) health care coverage costs in 2014? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 22Note: Only statistically significant differences are shown. Comparisons by organization staff size Comparisons by organization staff size: Highly likely to pass cost savings on to employees 1 to 99 employees (29%) > 2,500 to 24,999 employees (12%) • Organizations with 1 to 99 employees are more likely than organizations with 2,500 to 24,999 employees to be highly likely to pass health care coverage cost savings on to employees. Comparisons by organization staff size: Highly likely to pass cost savings on to employees 1 to 99 employees (29%) 100 to 499 employees (21%) > 500 to 2,499 employees (9%) • Organizations with 1 to 499 employees are more likely than organizations with 500 to 2,499 employees to be highly likely to pass health care coverage cost savings on to employees.
  23. 23. How likely is your organization to pass on to employees any increased health care coverage costs in 2014? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 23 Note: Only statistically significant differences are shown. Comparisons by organization sector • Privately owned for-profit organizations are more likely than publicly owned for-profit organizations to be highly likely to pass on increased health care coverage costs to employees. Comparisons by organization sector: Highly likely to pass on increased costs Privately owned for-profit (37%) > Publicly owned for-profit (19%) • Publicly owned for-profit organizations are more likely than privately owned for-profit, nonprofit and government organizations to be likely to pass on increased health care coverage costs to employees. Comparisons by organization sector: Likely to pass on increased costs Publicly owned for-profit (71%) > Privately owned for-profit (47%) Nonprofit (50%) Government (36%)
  24. 24. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 24 Future Impact of the PPACA
  25. 25. How concerned is your organization about losing its employees to voluntary turnover when public exchanges become available, potentially giving employees new options to purchase affordable coverage on their own? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 25 n = 680 2% 3% 26% 69% Extremely concerned Very concerned Somewhat concerned Unconcerned
  26. 26. As a result of the PPACA, do you anticipate that your organization's health- or nonhealth-related employee benefits will increase, stay the same or decrease? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 26 10% 85% 5% 23% 66% 11% Decreased benefits Same level of benefits Increased/improved benefits Health-related benefits (n = 677) Nonhealth- related benefits (n = 651)
  27. 27. Which of the following nonhealth-related benefits would your organization be most likely to reduce or cut? Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 27 Note: n = 53. Percentages do not equal 100% due to multiple response options. Only respondents who indicated their organization’s nonhealth-related benefits would decrease were asked this question. 17% 13% 17% 21% 23% 26% 34% 40% 45% 45% Other benefits Housing and relocation Flexible working benefits Business travel Professional and career development Family-friendly benefits Leave benefits Employee programs and services Retirement savings and planning Financial and compensation benefits
  28. 28. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 28 Demographics
  29. 29. Demographics: Organization Industry Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 29 Note: n = 751. Percentages do not equal 100% due to multiple response options. Percentage Health care and social assistance 15% Manufacturing 15% Professional, scientific and technical services 15% Finance and insurance 13% Educational services 10% Government agencies 9% Transportation and warehousing 6% Retail trade 4% Utilities 4% Accommodation and food services 3% Administrative and support and waste management and remediation services 3% Construction 3%
  30. 30. Demographics: Organization Industry (continued) Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 30 Note: n = 751. Percentages do not equal 100% due to multiple response options. Percentage Mining, quarrying, and oil and gas extraction 3% Religious, grant-making, civic, professional and similar organizations 3% Wholesale trade 3% Information 2% Real estate and rental and leasing 2% Repair and maintenance 2% Agriculture, forestry, fishing and hunting 1% Arts, entertainment, and recreation 1% Personal and laundry services <1% Other industry 11%
  31. 31. Demographics: Organization Sector Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 31 Note: n = 751. Percentages do not total 100% due to rounding. 47% 24% 16% 10% 4% Privately owned for-profit Nonprofit Publicly owned for-profit Government Other
  32. 32. Demographics: Organization Staff Size Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 32 n = 811 22% 35% 24% 16% 3% 1 to 99 employees 100 to 499 employees 500 to 2,499 employees 2,500 to 24,999 employees 25,000 or more employees
  33. 33. n = 764 Demographics: Other Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 33 U.S.-based operations only 81% Multinational operations 19% Single-unit organization: An organization in which the location and the organization are one and the same 40% Multi-unit organization: An organization that has more than one location 60% Multi-unit headquarters determines HR policies and practices 68% Each work location determines HR policies and practices 3% A combination of both the work location and the multi-unit headquarters determines HR policies and practices 29% Is your organization a single-unit organization or a multi-unit organization? For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both? Does your organization have U.S.- based operations (business units) only, or does it operate multinationally? n = 764 n = 480 Midwest 38% South 27% Northeast 18% West 16% Note: n = 731. Percentages do not equal 100% due to rounding. U.S. Region
  34. 34. • Response rate = 14% • 818 HR professionals from a randomly selected sample of SHRM’s membership with the job function of benefits or compensation or with the job title of manager or above participated in this survey • Margin of error +/-3% • Survey fielded May 2-16, 2013 34 SHRM Survey Findings: Health Care Reform—Impact on Health Care Coverage and Costs Survey Methodology
  35. 35. • Health Care Reform Resource Page: shrm.org/healthcare Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 35 Additional SHRM Resources
  36. 36. • For more survey/poll findings, visit www.shrm.org/surveys • For more information about SHRM’s Customized Research Services, visit www.shrm.org/customizedresearch • Follow us on Twitter @SHRM_Research Click on "Insert/Header&Footer" and Type Survey Title Here ©SHRM 2013 36 About SHRM Research Project leader: Tanya Mulvey, researcher, talent management & workforce skills, SHRM Research Project contributors: Alexander Alonso, Ph.D., SPHR, vice president, SHRM Research Evren Esen, manager, Survey Research Center, SHRM Research Copy editor: Katya Scanlan, SHRM Knowledge Center
  37. 37. The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Health Care Reform—Impact on Health Care Coverage and Costs ©SHRM 2013 37 About SHRM

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