Midsized Businesses Grapple with Healthcare Coverage Options

John Commins, August 29, 2011

Nearly one-third of the nation's midsized and larger businesses say they're not sure if they'll continue to offer healthcare coverage to their employees through 2014, when key provisions of the healthcare reform law take effect.

Towers Watson reports that 29% of the 368 businesses it surveyed had not decided if they would continue employer-based sponsorship for healthcare, or offset the loss of healthcare benefits with an equivalent salary increase. In the same survey, 54% of businesses said they would discontinue healthcare benefits to both pre-65 and post-65 retirees.

"With so much still unknown regarding both the short- and long-term impact of healthcare reform, most employers will not make wholesale changes to employer-sponsored health plans in 2012," Ron Fontanetta, senior health care consulting leader at Towers Watson, said in the report.

"However, a small group of employers is driving more fundamental change in 2012 by using account-based platform designs, aggressively positioning incentives, and rethinking subsidization levels."

The survey found that employer healthcare costs are projected to rise by 5.9% in 2012, compared with the 7.6% cost growth in 2011. Even with the slowing rate of healthcare inflation, 88% of employers said they will take steps to control their costs and avoid the impact of healthcare reform's excise tax.  

Roughly half (45%) said they will rethink their long-term healthcare strategy in 2012, and many businesses said they don't know how they will respond to the impact of state-based insurance exchanges in 2014.

John Commins

John Commins is a senior editor at HealthLeaders Media.


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