Although containing healthcare costs was one of the aims of reform, many companies expect to see some increase next year as a result of two of the law's provisions, according to a survey by HR consultancy Mercer. However, the survey found that companies are most worried about the Patient Protection and Affordable Care Act (PPACA) component that mandates a 40% excise tax on generous corporate health insurance plans, even though that tax doesn't go into effect until 2018.
Short-term cost increases involve the PPACA's requirement that starting with 2011 plan years, companies extend health benefits eligibility to employees' children up to the age of 26, as well as require that employers eliminate lifetime limits on health benefits. Asked about the effect of those two provisions, 13% of the almost 800 companies surveyed said they expect costs to rise less than 1%, while 28% cited a cost increase of 1% to 2%, 13% see costs rising 3% to 4%, and 12% said they expect cost increases of 5% or more.
The cost of the two provisions will vary depending on a company's circumstances, says Beth Umland, Mercer's director of research for health and benefits. "If an employer has a young workforce, they're not going to have a lot of adult children," Umland says. "Employers with an older workforce might be getting a lot of adult children coming on." She also notes that currently about 70% of employers impose lifetime limits on health benefits.
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