Key Findings Shifting Us Healthcare Landscape

7/31/2019 Key Findings Shifting Us Healthcare Landscape

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In late June, the U.S. Supreme Court will rule on the legal challenges to the Patient Protection

and Affordable Care Act (ACA or Health Care Reform). On the eve of this important ruling, theADP Research InstituteSM, a specialized group within ADP, wanted to gain insight into employers

attitudes and behaviors regarding the future of U.S. healthcare benets in general and the

impending ACA regulations in particular. So, in May 2012, the Institute surveyed HR/benets

decision makers in a national sample of small (1-49 employees), midsized (50-999 employees)

and large (1000+ employees) U.S. companies.

Here is a frst look at some o the key fndings rom that survey.

Shifting U.S. Healthcare LandscapeADP RESEARCH INSTITUTES BENEFITS STUDY


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The U.S. Healthcare Landscape is Going Through Proound ChangesMore than half of HR/benets decision makers in companies of all sizes see the U.S. healthcare landscape goingthrough profound changes that will leave it fundamentally different. (Small = 64%, Midsized = 52%, Large = 52%)

Regardless of the future of Health Care Reform, rising health care costs continue to be a majorissue for employers, prompting action independent of any legislation or regulation. easurestaken to control healthcare costs vary by company size.

Large employers are more likely to use preventivemeasures, such as wellness programs, as a meansof controlling healthcare costs as compared to smalland midsized companies. The propensity to do soincreases dramatically as company size increases.(Small = 21%, Midsized = 45% and Large = 76%)

Consumer-Driven Health Plans (CDHP)are gaining traction.

The majority of companies, regardless of size, havedecided to or are considering implementing CDHPs toreplace their traditional employer-sponsored healthplans. (Small = 56%, Midsized = 71%, Large = 78%)

Nearly one-third of midsized (32%) and close to halfof large companies (44%) have actually decided toimplement them.

Preparedness or Enactmento Certain ACA RegulationsThere is a low level of condenceamong employers in understandingACA requirements.

Fewer than half of HR/benets decision makers

across all sized companies are highly condent thatthey understand employer responsibilities underACA, even though the law was rst enacted inMarch 2010. (Small = 20% extremely/very condent,

Midsized = 17%, Large = 40%)

Notify Employees About Public Exchanges(arch 1, 2013) Low Level of Awareness inSmall and idsized Companies

Eective March 1, 2013, all employers will be required tonotiy all employees and new hires about the establishmento the public exchanges and that they may be able toshop or coverage on the exchanges (or coverage that

becomes eective in 2014). Employers will also have tonotiy employees about the eligibility rules or premiumassistance and explain that, i the employee choosescoverage through the exchange, the employee will losethe employers pre-tax contribution towards coverage.

Most HR/benets decision makers in small andmidsized companies are unaware of the upcomingemployee notication requirement, and even a thirdof those in large companies are not aware.(Small = 67% unaware, Midsized = 62%, Large = 32%)

STEPS TAEN/CURRENTLY DIN/DEFINITELYWILL D T CNTRL HEALTHCARE CSTS

30%

29%

25%

25%

21%

Small (1-49 EEs)

Offer wellness programs

Increase EEdeductibles/contributions

Reduce # of medical planoptions available to EEs

Stop offering retireehealthcare plans

Increase employee co-pays

52%

48%

46%

45%42%

41%

Midsized (50-999 EEs)



Offer HSAs


Offer a HDHP option

Reduce # of medical planoptions available to EEs

76%

62%55%

54%

48%

46%

Large (1,000+ EEs)


Offer HSAs


Offer a HDHP


Offer HRAs


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CPANIES HAE DNE THE FLLWIN:

Estimate how many EEs would quality as full-time under the Shared Responsibility regulations

Determine whether have at least one current health plan that has a 60% actuarial value,meaning that the plan is expected to pay, on average, at least 60% of the expected cost of covered benets

Estimate how many EEs have W-2 earnings that fall between 133% and 400% of the Federal Poverty Level

Estimate the # of EEs for whom current health coverage may be deemed unaffordable under these regulations(i.e. single premium exceeds 9.5% of their W-2 earnings with your company/organization)

Estimate the potential penalty amount that company/organization might have to pay under these regulations

50%

44%

41%

32%

27%

67%

56%

51%

53%

47%

Midsized (50-999 FTEs)Source: ADP RI Launch Survey May 2012 Large (1,000+ FTEs)

Provide Summary of Benets and Coverage (Fall 2012 pen Enrollment) Low Level of Preparedness in Small and idsized Companies

ACA requires health plans and health insurance issuers to provide participants with a summary o benefts and coverage(SBC) by the frst day o the frst open enrollment period beginning on or ater September 23, 2012 (The eective date o thisrequirement was originally on or ater March 23, 2012 postponed to September 23, 2012). The SBC rule applies to both ullyinsured and sel-insured plans (whether or not grandathered), as well as to health insurance issuers that oer group orindividual health insurance coverage. Retiree-only and HIPAA-excepted benefts plans (e.g., stand-alone dental and visionplans) are not subject to the SBC requirements.

Half or more of small and midsized companies are not prepared to provide the SBC, and a third of largecompanies are also not prepared for this requirement. (Small = 31% prepared, Midsized = 50%, Large = 66%)

Shared Responsibility Provisions (2014)

Employers with 50 or more FTEs will be subject to ACAs Shared Responsibility provisions, which require that suchemployers have to either provide heathcare benefts to employees working at least 30 hours per week (at least 130hours per month) or ace potential penalties.

In addition, employers who oer health insurance coverage will have to meet two additional requirements in orderto avoid potential penalties: the coverage must have at least a 60% actuarial value, and the coverage must beaordable, meaning that the employee contributions or single coverage cannot exceed 9.5% o an employees FormW-2 earnings. Actuarial value consolidates a plans various cost-sharing mechanisms into a single measure thatallows consumers to evaluate the plans overall fnancial protection.

While most HR/benets decision makers in companies with 50 or more FTEs do think their companieswill be impacted by the Shared Responsibility provisions of the ACA, a fth to a third do not or are not sure.(Midsized = 71% think company will be impacted, Large = 80%)

Midsized companies are much less likely than large companies to have done the necessary analysis tounderstand their companys potential exposure to penalties from violations of the Shared Responsibilityprovisions. But even among large companies, more than 50% have not taken action to quantify their potentialliabilities under these requirements.


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Research MethodologyThe ADP Research Institute conducted this online survey in May 2012. It includes input from827 HR/benets decision makers in U.S. enterprises:

312 participants from small organizations (those with 1-49 employees) 212which offer medical insurance to employees and 100 who do not (data on the latteris not included in the ndings in this short summary)

256 participants from midsized organizations (those with 50-999 employees)

259 from large organizations (those with 1,000 or more employees).

The resulting data for small, midsized and large companies achieved statistical reliability at the95% condence level.

Respondents had to be key decision makers (evaluators, recommenders, nal decision makers)for critical employee benets policy changes or major benets system/service purchases withintheir enterprises.

Eighty-four percent of respondents in the small business group who offered medical insurance wereowner, partners, principals, presidents or CEOs. Forty-four percent of respondents in midsizedenterprises and 29% of those in large ones were the actual heads of HR or employee benets fortheir organizations.

About the ADP Research InstituteSM

The ADP Research Institute, a specialized group within ADP, provides insights to leaders in both theprivate and public sectors concerning issues in human capital management, employment trends,and workforce strategy.

The ADP logo and ADP are registered trademarks of ADP, Inc. In the Business of Your Successand ADP Research Institute are service marks of ADP, Inc. All other trademarks and servicemarks are the property of their respective owners. 2012 ADP, Inc.

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Key Findings Shifting Us Healthcare Landscape

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