The latest health care survey conducted by consulting firm Towers Watson has found that the vast majority (88%) of the 440 midsize to large companies surveyed claimed that they had no plans to drop health care coverage in the near future. Among other findings, the Towers Watson survey noted that employers did plan to take a number of steps to control projected health care cost increases and to avoid having to pay the 40% excise tax on high cost (“Cadillac”) health plans in 2018. A majority of employers (58%) expect that they will trigger the excise tax in 2018 if they do not make changes to their current benefit strategy. As a result, 83% of employers are planning to take steps to control their costs to avoid the tax.

Notable survey results include the following:

• The number of employers stating that they would continue providing health coverage for their active employees increased 17% over last year’s survey.
• More than three-quarters (77%) view health care benefits as core to their employee value proposition over the next several years, and more than one-third of companies will examine their health care benefits in a total rewards framework by 2013.
• The cost of providing health coverage is projected to increase by 5.3% in 2013, down from the 5.9% projected increase for 2012.
• The total cost of providing coverage is estimated to be $11,507 per employee in 2013.
• To control costs, responding employers claimed that they will either adopt or continue to provide account-based health plans (ABHPs), which are plans “with a deductible offered together with a personal account (health savings account or health reimbursement arrangement) that can be used to pay a portion of the medical expense not paid by the plan.” According to the survey, by the year 2015, 80% of employers intend to offer an ABHP, up from 61% in 2013.
• Companies are also considering other steps to reduce costs, including changing plan options (63%), significantly reducing subsidization of coverage for spouses and dependents (38%), and using spousal waivers or surcharges (29%). Additionally, 13% plan to increase their employees’ share of health care premiums in 2013 by five percentage points or more, while 42% plan to increase employees’ share by one to five percentage points.
• Seventeen percent of responding employers claimed that they plan to offer telemedicine services by the year 2013, with another 27% considering doing so by 2014 or 2015.
• A greater number of employers responded this year that they were “very likely” to discontinue sponsoring health plans for retirees in 2014 or 2015. Many employers are also considering reducing the subsidization of coverage for their employees’ spouses and dependents, and passing along a greater percentage of the increased costs to their employees.

A recently-released report issued by the Government Accountability Office (GAO) examined a number of studies on the ACA’s impact on employer-sponsored coverage. The GAO report found that predictions as to how employers will react once the ACA is fully implemented vary widely depending on the type of study conducted. Generally, responses based on employer surveys – such as the one conducted by Towers Watson – varied the most.

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