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Most employers expect health care costs to increase under Obamacare

More than 60 percent of employers expect to see some increase in providing employee health care coverage when the Affordable Care Act takes effect in 2014.

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By Chad Terhune
Los Angeles Times
LOS ANGELES -- More than 60 percent of employers in a new survey anticipate some increase in their health benefit costs because of the federal Affordable Care Act.
The survey of 1,203 employers by the Mercer consulting firm found that 20 percent of those businesses expect an increase of 5 percent or more.
The firm said employers in retail and hospitality, which often have large numbers of part-time and lower-paid workers, will be among those most affected when the health care law takes full effect in 2014. Employers will be required to extend coverage to all employees working 30 hours or more per week or face possible penalties, according to Mercer.
"Extending coverage to more employees will be a significant new expense for these employers," said Tracy Watts, Mercer's U.S. health care reform leader, "especially because other provisions (of the law) regulate how much an employer can require employees to contribute to the cost and how good the coverage must be."
Overall, 6 percent of employers surveyed said they were likely to stop providing health benefits after government-run insurance exchanges open in 2014. That rose to 9 percent among retail and hospitality employers.
Many employers, large and small, are rethinking their health care strategies in the face of escalating health premiums and new requirements under the federal law.
Some businesses are opting for smaller networks of doctors and hospitals that restrict workers' choices and require employees to pay more to see higher-cost medical providers. Other employers are arranging for teams of doctors and nurses to focus more attention on high-cost patients suffering from multiple chronic conditions.
"While there are a number of potentially valuable cost-containment elements of the Affordable Care Act, the reality is unless something more is done there will still be upward pressure on health care costs," said Bill Kramer, executive director for national health policy at the Pacific Business Group on Health, a nonprofit coalition that includes large employers such as Boeing Co. and Walt Disney Co.
Kramer said "the unfinished business of health reform is cost containment."

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