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CFOs say they’ll increase health plan cost-sharing, blame PPACA

Originally posted January 09,2014 by Dan Cook on https://www.benefitspro.com

The old employee health care cost pass-along is going to heat up considerably this year. And guess who’s getting the blame for it? Yep, the Patient Protection and Affordable Care Act.

At least that’s the consensus from an in-depth survey of 96 corporate CFOs executed by Deloitte Consulting. Respondents told Deloitte they’ll be asking employees to kick in more for company coverage and, when asked why they have to, they’re going to point to Obamacare as the cause.

Health insurance trends were just part of this much broader survey. In general, the companies sampled are optimistic about 2014 and seem to feel their employers have done a good job of getting the ship in shape for this year. While they are forecasting relatively low sales increases in 2014 vs. 2013, earnings expectations actually increased slightly, and 54 percent expressed “rising optimism” about quarterly returned compared to 42 percent last quarter.

When it comes to health insurance costs, containment is the key word. These CFOs have been told to rein in health costs and they’re going to do so by shifting costs to those covered.

That this is the preferred option over reducing coverage was made clear when just 10 percent said they would offer employees less robust coverage packages. Instead, 60 percent have raised or will raise the employee portion of cost, keeping benefits where they’re at. (Only 10 percent said they’d beef up the health benefits package.) Another 28 percent are considering doing so.

When asked about health care cost controls, Deloitte said nearly two-thirds of companies have taken at least one major cost-control step, usually either implementing wellness programs or raising employees’ financial responsibility. About 45 percent plan to take a second cost-control step in the next 12 months. For cost pass-along employers, most choose higher premium contributions and deductibles.

Perhaps fearing a slump in morale or an increase in negative gossip, these CFOs weren’t about to let the company take the blame for higher employee cost sharing.

Deloitte said “42 percent of (U.S.) chief financial officers who have shifted additional healthcare costs to workers cited the Affordable Care Act as their impetus. The number blaming the healthcare law rose to 63 percent for CFOs planning to shift costs in the next year. The statistics suggest that Obamacare is aggravating the trend of employers charging staff higher healthcare costs in order to contain spending, and came as most CFOs expressed rising optimism about their companies’ prospects.”

The PPACA served as whipping boy on other fronts. The survey said:

  • About 13 percent blamed reduced their earnings forecasts on the act;
  • 8 percent cited the act for constrained hiring;
  • 4 percent said the act forced them to shift toward part-time staffing.