U.S. firms see modest health cost hike post-reform

* Many expect increase of 2 percent or less in 2011

* But nearly one-third still unsure of measure’s impact

* Few employers choosing to implement reforms early

By Susan Heavey

WASHINGTON, May 20 (BestGrowthStock) – Many employers expect to see
a slight increase in costs as they work to implement U.S.
healthcare reforms for 2011, but nearly one-third are still
struggling to figure out what the impact will be, according to
a survey released on Thursday.

And while many health insurance companies have moved to
implement certain key reforms early amid political pressure,
most employers are in no hurry to make such changes, the
nationwide survey by workforce consulting firm Mercer said.

Employers, “will get hit hard, harder or less hard by the
provisions … based on their situation,” such as the age and
size of their workforce, Beth Umland, Mercer’s research
director for health and benefits, told Reuters.

Regulators, insurers and employers are sifting through the
$940 billion overhaul of the nation’s healthcare system signed
into law by President Barack Obama in March. New rules include
extending parents’ insurance policies to adult children up to
age 26 and ending lifetime coverage limits.

Roughly 40 percent of employers said they anticipated their
costs would rise 2 percent or less next year, while 25 percent
expected a 3 percent or higher increase, the survey found.

Some 30 percent said they didn’t know what impact the
healthcare law will have, and just 3 percent said their
practices already comply with the new law.

Mercer, a subsidiary of Marsh & McLennan Companies Inc
(MMC.N: ), surveyed nearly 800 employers ranging from small to
large companies April 27-May 7.

Other concerns were the impact of a tax on high-end
insurance policies that offer generous benefits, and the cost
of extending health insurance to part-time workers, both
required under the law.


A number of reforms in the law won’t be applied for years,
but some are set to take effect on Sept. 23.

The Obama administration has called on insurers such as
WellPoint Inc (WLP.N: ), UnitedHealth Group Inc (UNH.N: ) to act
immediately to implement extended coverage to young adults and
the ban against canceling policies after customers become

But employers who offer insurance — they often self-insure
and use insurance companies as administrative payers — are not
under such pressure.

The administrative hassle of altering plans mid-year is
likely a major hurdle, said Tracy Watts, a Mercer consultant.

“This change is a pretty big deal for employers, with new
notification requirements, employee communication and tax
implications. Not to mention that it would be an immediate,
unbudgeted business expense,” Watts said in a statement.

Still, companies “are not in a blind panic over this,”
Mercer’s Umland said. “There’s definitely cost implications,
but … employers are not saying ‘We can’t handle this, let’s
get out of the business.'”

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(Editing by Xavier Briand)

U.S. firms see modest health cost hike post-reform