Employers brace for PPACA-related cost increases

When asked about the health care goals that are most important to their organizations, 96% of respondents identified cost containment as an essential or high priority; 88% pointed to encouraging healthier lifestyles; and 75% identified improving the quality of care. 

When they look at the Patient Protection and Affordable Care Act, however, nearly all respondents (94%) believe that the law will raise their costs; 61% believe it will have a minimal effect on encouraging healthier lifestyles, and 73% believe it will have either a negative impact on the quality of care or none at all. 

"While many employers have not yet assessed the full impact that reform will have on their businesses, they do realize that the responsibility to hold costs down will fall primarily on their shoulders," said Mark Maselli, North American Health and Group Benefits Leader for Towers Watson. 

In order to cope with anticipated cost increases, many employers plan on: 

� Passing on increases to employees (88%) 

� Reducing health benefits and programs (74%) 

� Absorbing costs in the business (33%) 

� Passing on increases to customers (20%) 

Employers remain committed to pre-PPACA initiatives designed to hold the line on rising medical costs and improve employee health. For example, only 12% said they would eliminate or reduce their wellness/health promotion programs in the wake of health care reform. 

In fact, 48% of survey respondents believe that the law will result in an overall increase in the number of wellness programs. In addition, employers expect that PPACA will lead to increases in: 

� Adoption of total replacement consumer-directed health plans (58%) 

� Transparency of provider prices (37%) 

� Provider quality (35%) 

(The online survey, conducted in May 2010, drew responses from 661 large firms.)