Employers Deeply Distressed by Many Aspects of Health Reform Law, Lockton Survey Shows

Nearly one in five employers say they will consider dropping group coverage in 2014 when "play or pay" mandate takes effect, according to Lockton survey

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Lockton

Jun 17, 2011, 10:01 ET

KANSAS CITY, Mo., June 17, 2011 /PRNewswire/ -- More than 70 percent of employers responding to a May 2011 survey by Kansas City-based Lockton, the world's largest privately held brokerage and consulting firm, are concerned or very concerned about the potential impact of the health reform law's 2014 "play or pay" mandate on employers. Employers say the availability then of insurance exchanges offering federally subsidized coverage to most workers will give employers flexibility to terminate group coverage – and 18.8 percent of employers participating in the Lockton survey say they will consider doing just that.

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"No surprise there," said Edward Fensholt, director of Lockton's Compliance Services Division. "The survey confirmed what we have been hearing anecdotally from our clients for months: that they are very apprehensive about the reform law's mandates. Employers know they have a lot of extra work and expense ahead of them." Please click here to read the alert and review the survey results.

More than 40 percent of Lockton Benefit Group's client-companies, representing a wide range of industries, responded to the confidential survey. Employers were asked 10 questions about health reform – several intended to gauge their levels of concern about the impact of key aspects of the law. Respondents' sentiments, by and large, were consistent: they are frustrated that the law makes health plan administration—already a costly and administratively burdensome endeavor—even more so. Indeed, a full 80 percent of responding employers said they are concerned or very concerned about the additional administrative obligations health reform will require of them.

Other aspects of the law that are of high concern to respondents include the cost impact of the 2010-11 benefit mandates (elimination of dollar maximums, coverage of adult children, etc.) and the potential cost impact of automatic enrollment in 2014.

"For many employers," said Mike Brewer, president of Lockton Benefit Group, "as they become more aware of the law's requirements and costs, the level of concern is escalating; we saw that in the survey results. As an employee benefits consultant, we'll remain diligent on behalf of our employer-clients. We will continue to keep them abreast of legislative and regulatory developments and how they relate to their businesses. Our Health Reform Advisory Practice is dedicated to just this – with attorneys, actuaries, and physicians monitoring what is happening across the nation. We've been to Capitol Hill twice this year to speak on behalf of our clients, and we'll certainly go back if we have the opportunity. We want Congress to see the results of this survey."

It's not all doom and gloom. Lockton employer-clients look forward in 2014 to the reform law's increase in permissible health-related wellness incentives from 20 percent to 30 percent of the total cost of an employee's coverage. Responding employers also said they will appreciate the insurance exchanges offering a coverage option to part-time or otherwise benefit-ineligible workers in 2014, and supplying employers a way to eliminate pre-65 retiree coverage, knowing their retirees have another option for subsidized health insurance.

Please click here to review the results of Lockton's May 2011 Employer Health Reform Survey.

About Lockton

More than 4,100 professionals at Lockton provide more than 15,000 clients around the world with insurance, benefits, and risk management services, offering an uncommon level of client service. From its founding in 1966 in Kansas City, Missouri, USA, Lockton has grown to become the largest privately held insurance broker in the world and 9th largest overall. Independent researcher Greenwich Associates awarded Lockton its 2011 Service Excellence Award for risk management for large companies. Business Insurance has twice recognized Lockton as a "Best Place to Work in Insurance." You can learn more at www.lockton.com.

SOURCE Lockton