Shrm poll health_care2_actionsbarriers

September 17, 2010

SHRM Poll: Organizations’ Response to Health

Care Reform—Challenges and Actions

Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010

Health Care Reform Series: Poll 2Introduction

Landmark legislation that brought about major reforms in health care coverage in the United States was enacted in March 2010. The law affects employers and HR professionals in a variety of ways. SHRM will be conducting a series of polls on health care reform and its implications for employers and employees. This presentation covers the findings from the second poll in this series, which was conducted in July 2010.

2


Key Findings

• How well do organizations understand the specific aspects of the health care reform law? 50% of organizations have taken some type of action in response to the passing of the health care reform bill. Due to a lack of clarity on the specifics of the law, another 50% have not taken action or are unsure if action has been taken. Sixty-four percent of HR professionals are having difficulty understanding the gray areas and details of the law, 52% are not comfortable with what they know about the law and 54% see lack of understanding as the main implementation barrier. Clearly, HR professionals are waiting on additional information to make informed decisions.

• Where are organizations turning to learn about the health care reform law? Nearly 75% of organizations report using an insurance broker to inform them on the new law. Organizations that have not yet taken action are likely relying on information from their insurance broker on how to proceed.

• What are the implementation barriers of the health care reform law? Lack of overall understanding of the details of the law, implementation costs and employee out-of-pocket costs were reported as the main barriers to implementing the new law.

• What actions are organizations taking in response to the new health care reform law? The top five actions are: 1) working with legal and/or benefits counsel to understand the implications of the law for the organization, 2) sending HR staff to training to learn the details of the law, 3) partnering with current health care benefits providers to design the 2011 health care plan, 4) developing health care cost analysis for organizational leadership, and 5) analyzing the short-term financial impact of the law and the feasibility of offering health care.

3


0%

10%

20%

30%

40%

50%

Yes No Not sure

50%

39%

11%

4

Since April 1, 2010, has your organization taken any action in response to the passing the new health care reform law?

Note: n = 1095

• 39% of respondents report having taken no action, and these findings are consistent with the data in the next three slides. Specifically, 64% of HR professionals are having difficulty understanding the gray areas and details of the law (see Slide 6); 52% are not comfortable with what they know about the law (see Slide 8); and 54% see lack of understanding as the main implementation barrier (see Slide 9). Clearly, HR professionals are waiting on additional information to make informed decisions.

• Respondents who report having taken no action and those who are not sure if action has been taken are likely relying on their insurance broker to take action, as nearly three-quarters of HR professionals report using an insurance broker to inform them on the new law (see Slide 10).


Since April 1, 2010, has your organization taken any action in response to the passing of the new health care reform law?

• Publicly owned for-profits (62%) were more likely than privately owned for-profits (47%) to report that they have

taken action in response to the passing of the new health care reform law.

• Organizations whose primary medical benefit is currently self -insured (61%) were more likely than organizations

with insured (44%) primary medical benefit to report that they have taken action in response to the passing of the

new health care reform law.

5

Comparison by Organization’s Sector and Medical Benefit Funding


0%

1%

2%

2%

7%

11%

13%

31%

33%

0% 10% 20% 30% 40%

Keeping the C-suite informed about the implications of the new law

I don’t see anything problematic about the new law for HR

Keeping employees informed about the implications of the new law

The short compliance deadlines

Keeping track of when various parts of the law take effect

Determining impact on future total compensation strategy

Keeping up with the various regulations and relating them to the appropriate provisions

Understanding the details of the new law

The grey areas of the new health care reform law

6

In your opinion as an HR professional, what would you say is the biggest problem for HR caused by the new health care reform law?

Note: n = 774.

• 64% of HR professionals are having difficulty understanding the gray areas and details of the law.


In your opinion as an HR professional, what would you say is the biggest problem for HR caused by the new health care reform law?

• The grey areas of the new health care reform law (by medical benefit funding): Self-insured organizations

(37%) were more likely than insured organizations (28%) to report the grey areas of the new health care reform law

as a problem for HR.

• Understanding the details of the new law (by medical benefit funding): Insured organizations (36%) were more

likely than self-insured organizations (28%) to report understanding the details of the new health care reform law as

a problem for HR.

• Determining impact on future total compensation strategy (by operations location): Organizations with

multinational operations (15%) were more likely than U.S.-based (10%) organizations to report determining impact

on future total compensation strategy as a problem for HR .

7

Comparison by Organization’s Operations Location and Medical Benefit Funding


What is your level of agreement with the following statement:"I am comfortable with what I know about the new health care reform law."

0%

10%

20%

30%

40%

50%

Strongly disagree Disagree Agree Strongly agree

11%

41%

45%

3%

8Note: n = 774

• 52% of HR professionals are not comfortable with what they know about the law.


6%

1%

3%

5%

15%

16%

37%

54%

0% 10% 20% 30% 40% 50% 60%

Other

Lack of support by unions

Lack of support by employees

Lack of support by senior management

Not applicable, there is no implementation barrier for my organization

Employee out-of-pocket cost

Cost of implementing

Lack of overall understanding of details of the new law and its impact on my organization

9

In general, what do you think is the main implementation barrier of the new health care reform law for your organization?

Note: n = 759. Percentages do not total 100% as multiple responses were allowed. Respondents were allowed to select their top two options.


12%

17%

30%

42%

54%

73%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

Internal experts

Consultants

Legal counsel (internal or external)

SHRM’s resources on the new health care reform law

Insurance broker

10

What are the resources your organization is currently using in regard to the new health care reform law?

Note: n = 759. Percentages do not total 100% as multiple responses were allowed. Respondents were allowed to select their top two options.



• Insurance broker (by staff size): Smaller organizations (those with fewer than 2,500 employees) were more likely than organizations with

2,500 to 24,999 employees to report that they are currently using insurance broker as one of their resources in regard to the new law.

• SHRM’s resources on the new health care reform law (by staff size): Smaller organizations were more likely than organizations with

2,500 to 24,999 employees to report that they are currently using SHRM’s resources as one of their resources in regard to the new law.

• Legal counsel (internal or external) (by staff size): Larger organizations (those with 500 or more employees) were more likely than

smaller organizations (100 to499 employees) to report that they are currently using legal counsel as one of their resources in regard to the

new law.

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Comparison by Organization Staff Size

Smaller Organizations Larger Organizations Differences Based on

Organization Staff Size

•50 to 99 employees (97%)


•500 to 2,499 employees (75%)

•2,500 to 24,999 employees

(55%)Smaller organizations > larger

organizations



•100 to 499 employees (68%) •2,500 to 24,999 employees

(40%)Smaller organizations > larger

organizations



•100 to 499 employees (28%) •500 to 2,499 employees (49%)


(57%)

•25,000 or more employees

(57%)

Larger organizations > smaller

organizations



• Consultants (by staff size): Larger organizations (those with 500 to 24,999 employees) were more likely than organizations with 100 to 499

employees to report that they are currently using consultants as one of their resources in regard to the new law.

• Internal experts (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than smaller organizations

(500 to 2,499 employees) to report that they are currently using internal experts as one of their resources in regard to the new law.

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Comparison by Organization Staff Size (continued)





(57%)


organizations



•500 to 2,499 employees (18%) •2,500 to 24,999 employees

(32%)Larger organizations > smaller

organizations



Differences Based on

Organization Sector

Differences

Based on

Organization’s

Operations

Location

Differences

Based on

Medical Benefit

Funding

Differences

Based on Union

Status

Insurance broker

Privately owned for-profits

(80%) & nonprofits (81%) >

publicly owned for-profits

(60%) & government (59%)

U.S.-based only

organizations (76%)

> multinational

operations (66%)

Insured (83%) > self-

insured (66%)

Non-unionized (75%)

> Unionized (65%)

SHRM’s resources on the new health care reform law

Privately owned for-profits

(59%) & government (66%)

> publicly owned for-profits

(43%)

U.S.-based only

organizations (56%)

> multinational

operations (43%)

Insured (59%) > self-

insured (51%)

Legal counsel (internal or external)Publicly owned for-profits

(56%) > privately owned

for-profits (37%)

Multinational

operations (50%) >

U.S.-based only

organizations (39%)

Self-insured (52%) >

insured (29%)

Unionized (51%) >

non-unionized (40%)

Consultants

Publicly owned for-profits


for-profits (25%) &

nonprofits (27%)

Multinational

operations (42%) >

U.S.-based only

organizations (27%)


insured (15%)

Unionized (41%) >

non-unionized (28%)

Internal expertsPublicly owned for-profits


for-profits (15%)

Multinational

operations (22%) >

U.S.-based only

organizations (16%)


insured (14%)

13

Comparison by Selected Organizational Demographics

Note: Blank cell indicates that there were no significant differences in this category.


What actions has your organization taken in response to the passage of the new health care reform bill?

Already

Doing/Done

Planning

to Do

Currently NOT

Doing and Have

NO Plans to Do

Working with legal and/or benefits counsel to help the organization understand the

implications of the new law 80% 15% 5%

Sending HR staff in organization to classes (i.e., attending seminars, participating in

webcasts on this topic) to learn details of the new law and its impact on organization 78% 14% 8%

Partnering with current health benefits provider to design 2011 health care plan that will

include areas affected by the new law 75% 24% 1%

Developing health care cost analysis for organization’s leaders 59% 35% 7%

Analyzing short-term financial impact of the new law and the feasibility of offering

health care 57% 33% 10%

Developing a new health care strategy plan for our organization 48% 39% 13%

Developing an employee communication strategy related to the new law 45% 46% 9%

Developing employee communication on the impact of the new law on the

organization’s health care plan and the employees 41% 54% 6%

Analyzing long-term financial impact of the new law and the feasibility of offering health

care 38% 54% 9%

Communicating impact of the new law to employees 37% 57% 7%

Communicating impact of the new law to retirees 12% 40% 48%

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Note: n = 395-427. Percentages do not total 100% due to rounding. Only respondents whose organizations have taken action(s) in response to the

passing of the new health care reform law were included in this analysis. “Not sure/not applicable” responses were excluded from this analysis.

• HR professionals appear to be focused first on understanding the law and its implications for the organization and employees before communicating with employees/retirees.


What actions has your organization taken in response to the passing of the new health care reform law since April 1, 2010?

• Partnering with current health benefits provider to design 2011 health care plan that will include areas affected by the new health

care reform law (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than organizations with

fewer than 500 employees to report that they are partnering with their current health benefits provider to design 2011 health care plan that

will include areas affected by the new law.

• Developing health care cost analysis for organization’s leaders (by staff size): Larger organizations (those with 2,500 to 24,999

employees) were more likely than organizations with fewer than 500 employees to report that they are developing health care cost analysis

for organization’s leaders.

• Analyzing short-term financial impact of the new law and the feasibility of offering health care (by staff size): Larger organizations

(those with 2,500 to 24,999 employees) were more likely than smaller organizations (fewer than 2,5000 employees) to report they are

currently analyzing short-term financial impact of the new law and the feasibility of offering health care.

15

Comparison of Actions Organizations Have Taken by Organization Staff Size





organizations





organizations




•500 to 2,499 employees (59%)



organizations



• Developing a new health care strategy plan for our organization (by staff size): Larger organizations (those with 2,500 to 24,999

employees) were more likely than organizations with fewer than 500 employees to report that they are developing a new health care strategy

plan for their organization.

• Developing an employee communication strategy related to the new law (by staff size): Larger organizations (those with 2,500 to

24,999 employees) were more likely than organizations with fewer than 2,500 employees to report that they are developing an employee

communication strategy related to the new law.

• Developing employee communication on the impact of the new law on organization’s health care plan and the employees (by staff

size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than smaller organizations (500 to 2,499 employees) to

report they are currently developing employee communication on the impact of the new law on organization’s health care plan and the

employees.

16

Comparison of Actions Organizations Have Taken by Organization Staff Size (continued)





organizations




•500 to 2,499 employees (38%)



organizations





organizations



• Analyzing long-term financial impact of the new law and feasibility of offering health care (by staff size): Larger organizations (those

with 2,500 to 24,999 employees) were more likely than smaller organizations (500 to 2,499 employees) to report they are currently analyzing

long-term financial impact of the new law and their ability to offer health care.

• Communicating impact of the new law to employees (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were

more likely than smaller organizations (500 to 2,499 employees ) to indicate that they are communicating impact of the new law to

employees.

17

Comparison of Actions Organizations Have Taken by Organization Staff Size (continued)





organizations





organizations



Differences

Based on

Organization

Sector

Differences

Based on

Organization’s

Operations

Location

Differences

Based on

Medical Benefit

Funding

Differences

Based on Union

Status

Working with legal and/or benefits counsel to help

organization understand the implications of the new law Self-insured (83%) >

insured (73%)

Sending HR staff in our organization to classes (i.e.,

attending seminars, participating in webcasts on this topic) to

learn details of the new law and its impact on the

organization

Privately owned for-

profits (86%) >

publicly owned for-

profits (70%)

Partnering with current health benefits provider to design

2011 health care plan that will include areas affected by the

new health care reform law


insured (64%)

Developing health care cost analysis for organization’s

leaders Self-insured (71%) >

insured (44%)

Unionized (73%) >

non-unionized (58%)

Analyzing short-term financial impact of the new law and the

feasibility of offering health care

Publicly owned for-

profits (73%) >

privately owned for-

profits (55%)

Multinational

operations (73%) >

U.S.-based only

organizations (55%)


insured (43%)

Unionized (72%) >

non-unionized (57%)

Developing a new health care strategy plan for our

organization Self-insured (57%) >

insured (34%)

18

Comparison of Actions Organizations Have Taken by Selected Organizational Demographics




Differences

based on

organization

sector

Differences

based on

organization’s

operations

location

Differences

based on medical

benefit funding

Differences

based on union

status

Developing an employee communication strategy related to

the new law Self insured (51%) >

insured (34%)

Developing employee communication on the impact of the

new law on organization’s health care plan and the

employees

Multinational

operations (53%) >

U.S. based only

organizations (37%)

Self insured (50%) >

insured (25%)

Analyzing long-term financial impact of the new law and the

feasibility to offer health care

Publicly owned for-

profits (55%) >

privately owned for-

profits (35%)


insured (28%)

Communicating impact of the new law to employees

Multinational

operations (49%) >

U.S. based only

organizations (32%)


insured (29%)

19


Comparison of Actions Organizations Have Taken by Selected Organizational Demographics (continued)


Since the enactment of the new health care reform law, has there been an increase or a decrease in contact from your organization’s plan participants (e.g., employees, spouses, retirees) with your HR/benefits staff or third-party administrator (TPA)?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

From retirees

From non-employee plan participants (e.g., spouse)

From active employee participants

1%

1%

1%

90%

91%

80%

10%

8%

19%

Decrease About the same Increase

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Note: n = 291-715. Percentages do not total 100% due to rounding. “Not sure/not applicable” responses were excluded from this analysis.


Since the enactment of the new health care reform law, has there been an increase or a decrease in contact from your organization’s plan participants (e.g., employees, spouses, retirees) with your HR/benefits staff or third-party administrator (TPA)?

• Increased contact from active employee participants (by medical benefit funding): Self-insured organizations (25%) were more likely

than insured organizations (12%) to report that there has been an increase in contact with HR/benefits staff or TPA from active employee

participants.

• Increased contact from active employee participants (by sector): Publicly owned for-profits (27%) were more likely than privately owned

for-profits (14%) to report that there has been an increase in contact with HR/benefits staff or TPA from active employee participants.

21

Comparison by Organization’s Sector and Medical Benefit Funding


How is your organization’s primary medical benefit currently funded?

Self-insured, 56%

Insured, 44%

22Note: n = 749


How is your organization’s primary medical benefit currently funded?

• By staff size: Larger organizations (those with 500 or more employees) were more likely than organizations with fewer than 500 employees

to report that their organization’s primary medical benefit is self-insured.

• By operations location: Organizations with multinational operations (71%) were more likely than U.S.-based (51%) organizations to report

that their organization’s primary medical benefit is self-insured.

• By sector: Publicly owned for-profits (72%) were more likely than privately owned for-profits (50%) and nonprofits (49%) to report that their

organization’s primary medical benefit is self-insured.

• By union status: Unionized organizations (64%) were more likely than non-unionized (54%) organizations to report that their organization’s

primary medical benefit is self-insured.

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Comparison by Organization’s Staff Size, Sector, Operations Location, Sector and Union Status





(84%)

•25,000 or more employees

(84%)


organizations


Demographics: Organization Industry

Industry

Manufacturing –other 18%

Health care, social assistance (e.g., hospitals, clinics) 13%

Financial services (e.g., banking) 8%

Services –professional, scientific, technical, legal 7%

Educational services/education 6%

Government/public administration—federal, state/local, tribal 5%

Retail/wholesale trade5%

Construction, mining, oil and gas 4%

Insurance4%

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Note: n = 754. Percentages do not total 100% due to rounding.


Demographics: Organization Industry (continued)

Industry

Other services (e.g., other nonprofit, church/religious organizations) 4%

Transportation, warehousing (e.g., distribution) 3%

High-tech 3%

Services—accommodation, food and drinking places 3%

Utilities 2%

Real estate, rental, leasing 2%

Publishing, broadcasting, other media 2%

Manufacturing—auto/auto-related 2%

Arts, entertainment, recreation 1%

Consulting 1%

Telecommunications 1%

Association—professional/trade 0%

Pharmaceutical 0%

Biotech 0%

Other 5%

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Demographics: Organization Sector

4%

8%

20%

21%

47%

0% 10% 20% 30% 40% 50% 60%

Other

Government sector

Nonprofit organization

Publicly owned for-profit organization

Privately owned for-profit organization

26Note: n = 756


Demographics: Organization Staff Size

6%

27%

35%

26%

5%

0%

10%

20%

30%

40%

50%

50 to 99 employees 100 to 499 employees 500 to 2499 employees 2500 to 24999 employees

25000 or more employees

27



Demographics: Other

28

Note: n = 763

U.S.-based operations 75%

Multinational operations 25%

Single-unit company: A

company in which the

location and the company

are one and the same

29%

Multi-unit company: A

company that has more than

one location

71%

Multi-unit headquarters determines

HR policies and practices

64%

Each work location determines HR

policies and practices

1%

A combination of both the work

location and the multi-unit

headquarters determine HR policies

and practices

35%

Is organization a single-unit company or a multi-

unit company?

Are HR policies and practices determined by

the multi-unit corporate headquarters, by each

work location or both?

Does the organization have U.S.-based

operations (business units) only or

does it operate multinationally?

Note: n = 750

Note: n = 556

• 19% of organizations indicated that

employees at their work location were

unionized.

Note: n = 755


SHRM Poll: Organizations’ Response to Health Care Reform – Poll 2

• Response rate = 21%

• Sample comprised of 1,095 randomly selected HR professionals with the job title of manager and above, as well as HR professionals in the compensation and benefits functional area. All analyses were based on respondents working at organizations with a staff size of 50 employees or more.

• Margin of error is +/- 3%

• Survey fielded July 22–August 3, 2010

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Methodology

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