The cost of providing health insurance to workers has reached the tipping point for employers, according to a new survey by Associated Industries of Massachusetts (AIM).
Ninety-seven percent of 523 employers who took part in the 2010 AIM Employer Issues Survey identified the cost of health insurance as a matter of “great” or “moderate” concern. Health costs were also the most common response when employers were asked generally to name the problems that keep them awake at night.
Health issues easily outdistanced state taxes (83 percent great or moderate concern), energy costs and unemployment insurance costs (both 77 percent) on the list of concerns among employers already struggling in the face of a persistent economic slowdown.
“Health insurance has been a concern for employers for years, but the issue appears to have reached the crisis stage long predicted by economists and other experts,” said Richard C. Lord, President and Chief Executive officer of AIM.
“The numbers are staggering and the responses are passionate. At a time when the federal government has embarked upon health reform, it’s clear that we’re heading for an economic catastrophe if leaders in government, health care and business do not address the cost issue now.”
Employer comments about rising health insurance premiums underscore the fact the issue has emotional as well as financial consequences.
“Premium increases absolutely affect our company, but my biggest concern is for our employees,” wrote one employer.
“Year after year we offer them plan choices with reduced coverages/high deductibles/high co-pays with an expectation of reduced premiums, yet the opposite happens. The cost of health insurance is out of control. As an HR person I'm upset by this and I think I have a better understanding of the entire process. I can't even imagine how our employees feel.”
AIM conducts the Issues Survey every two years to identify the employer priorities that will make up its public policy agenda.
The debate over health costs ignited into a firestorm this year as small employers confronted insurance premium increases of up to 40 percent. Four years after Massachusetts employers supported the commonwealth’s landmark health insurance reform, those same employers told policymakers that the Massachusetts health care market is unsustainable without fundamental changes to the way companies and consumers purchase medical services.
AIM took the lead in seeking health care cost control for employers in March by proposing an amendment on Beacon Hill that would have temporarily limited reimbursements to some doctors and hospitals and required health plans to offer low-cost plans with reduced networks of providers. The Patrick administration, meanwhile, rejected scores of proposed rate increases submitted by health insurers before eventually reaching settlements with those companies.
The Legislature eventually passed, and Governor Deval Patrick signed, a cost-control bill that represented a first step toward creating relief for businesses while policymakers, medical providers, insurers and employers develop long-term solutions to a problem that continues to threaten the state economy.
“That will be at the top of my agenda next session, and I expect a strong commitment from everyone. Long-term reform is an absolute necessity for the future stability of health care and our economy,” Senate President Therese Murray said.
Employers who responded to the AIM survey recognize the complexity of addressing the economic underpinnings of the health-care system.
“It has to be health care, both the current costs and the fact that the administration seems overly concerned with the coverage issue and not enough attention is being devoted to developing solutions to the underlying problem that it costs too much to deliver average health care,” an employer wrote.
“I believe the federal government addressed some real issues with the health care reform, especially around the coverage issues, but the question remains as to whether or not they have a true understanding of how much it will cost and how it will be funded.”
Beyond state and local taxes, energy costs and unemployment insurance, the survey indicates that employers remain concerned about workers compensation insurance costs, the quality of public education and the availability of qualified workers.
Employers who did not point to health costs as the issue that keeps them awake nights instead got insomnia from economic problems - such as lack of access to credit and the construction slump - and broader concerns such as government encroachment on the ability of entrepreneurs to create new businesses and jobs.
Federal issues are also on employer radar screens. Survey participants expressed concern about proposed cap-and-trade climate change legislation, off-balance accounting for Social Security liabilities and expansion of the federal bureaucracy in conjunction with health care and financial services reform.