As new provisions under Obamacare began to take effect, more and more employers are considering shifting their workers onto private health exchanges—instead of offering the traditional employer-based plans.
A new survey of 1,200 businesses released today by the PricewaterhouseCoopers Health Research Institutes (PWC) found that one third of employers are now considering shifting their employees onto private health exchanges.
The employers say that new costs and regulations brought on by the Affordable Care Act are prompting them to rethink the way they offer benefits to their employees.
Some companies, for example, are moving toward a model where they would give their workers a fixed sum of money that employees would then put towards a policy of their choice sold on the health exchanges. Researchers say that the exchanges might be the best option for workers and businesses, since it reduces the administrative burden for companies, and offers benefits like consumer decision for workers.
“Early tremors in the market suggest a coming paradigm shift from a business-to-business model toward a business-to-consumer model of purchasing healthcare,” the report said.
Right now, more than 150 million Americans receive health coverage through their employers, but health policy experts and researchers expect that to change in the years ahead as the ACA begins to take hold. For instance, the employer mandate –requiring businesses with 50 or more full-time workers to offer coverage to their full-time employees or pay a stiff penalty--will take effect in January of next year. So employers will have to decide whether to provide direct coverage or search for alternatives.
This year, under the first open enrollment period, more than 8 million Americans signed up for health coverage on the exchanges, and that number is supposed to increase each year—especially if employers are eyeing the exchanges as well.
“The marketplace concept has captured the attention of employers with promises of cost control, enhanced employee experience and freedom from the day-to-day burdens of managing plan benefits,” the report said. “Private exchanges also represent an opportunity for businesses to move more easily from a defined insurance benefit to a defined contribution.”
The idea of more companies shifting away from employer-based plans has actually been endorsed by some of the health care law’s lead architects. Earlier this year, Ezekiel Emanuel, former Obama administration official, predicted in his book, Reinventing American Health Care that employers will gradually begin to shift their employees onto the public exchanges. Emanuel calls the move an “unintended” but “positive” consequence of the law.
There are also other ways employers are trying to rein in their health costs. In another report released this week by the Kaiser Family Foundation, researchers found that other employers are going a different route to try to control their health costs—like workplace wellness programs that encourage workers to live healthier lifestyles. The Kaiser survey found that at least 36 percent of companies with more than 200 workers, and 18 percent of businesses over all, have some sort of wellness program. Some programs offer discounts on health coverage to workers who complete health-risk assessments, others penalize poor performance or charge people more for high-risk health behaviors like smoking.
The New York Times noted a separate analysis by the Rand Corporation earlier this year found that about half of all companies with 50 or more employees have wellness programs.
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