Survey: Employers say cost is key barrier to coverage

Most employers who don't offer health coverage would not be willing to spend more than $50 per employee to offer a health plan to their workers, according to a new survey by benefits consultant Mercer. (The survey can be accessed at www.mercer.com/summary.htm?idContent=1325605.)

The survey was completed by 545 employers that do not offer employee health coverage, and nearly 2,900 employers that do.

When asked their primary reason for not offering health coverage, 43% said they can't afford it, the American Hospital Association reports. Other reasons included employees being covered under other plans (20%), high workforce turnover (9%) and the perception that employees would rather have more pay than health coverage (9%).

Asked how much they would be willing to contribute to offer a health plan, 59% cited $50 or less, the association says. Only 10% said they would pay at least $200. To put these results in context, Massachusetts' "play or pay" law requires employers who don't meet the "play" standard to pay $295 per employee per year to the state, and indications are that this amount might soon be adjusted upward, according to Mercer.

Half of all employers oppose "play or pay" laws, which would require employers to offer health coverage or pay into a government fund to cover the uninsured. Just 31% are supportive, and 19% neither approve nor disapprove. Wholesalers/retailers (68%) and manufacturers (56% are most likely to disapprove of a "play or pay" requirement.

According to Mercer, almost all employers who do not sponsor health coverage have fewer than 500 workers.

"This finding highlights how tough it's going to be to ask very small employers to voluntarily take on the expense of providing health coverage," said Mercer partner Linda Havlin. "It also helps explain why even relatively low-cost catastrophic plans like HSAs have not made great inroads with small employers that find it financially challenging to offer coverage."

Just over half (53%) of employers support requiring individuals to have health coverage if they can afford it, either through their employer or purchased on their own. Nearly half of employers (46%) support having the federal government provide stop-loss protection to cover an employer's catastrophic expenses.

Heath care reform areas targeted

The survey identified employers with workers in Massachusetts, San Francisco, and Vermont, which have enacted broad-based health care reforms requiring employer compliance. The survey asked them what actions they had to take to comply and how burdensome these actions were.

Of the 384 employers with workers in Massachusetts, where reforms are the most complex, 79% have been required to take some action:

• collecting information to meet new reporting requirements (72%);

• establishing a new Section 125 (cafeteria) plan (41%);

• modifying an existing plan (12%);

• establishing a new plan to comply with the Employee Retirement Income Security Act (ERISA) (10%).

Interestingly, only 4% reported that these efforts required "considerable" resources. Most reported that they required "minimal or no resources" (58%) or "some resources, but [not enough to affect] other priorities" (38%).

Most employers are concerned about the potential impact of state or local health reform initiatives. Almost nine out of 10 large employers (86%) said they were concerned or very concerned about the impact on cost. In comparison, 71% are concerned about losing the flexibility to design programs to meet organizational needs, and 64% are concerned about losing ERISA protections.

About half of these employers say it is very unlikely that they will offer a plan in the next three years (49%), and only about one-fourth say it is even somewhat likely.

"While most employers are committed to helping employees and their families be healthy, productive and financially secure, the results show that cost is simply too big a concern for many small employers," Havlin said.