According to a Ceridian poll, many employers are waiting for a Supreme Court decision. 

Health care reform presents challenges and choices to employers

According to a Ceridian poll, many employers are waiting for a Supreme Court decision.

As open enrollment season approaches, many employers are taking a wait-and-see approach to health care reform while others are making significant workplace changes.

Since the passage of the Patient Protection and Affordable Care Act (PPACA) in March 2010, the landmark legislation has already had a measurable impact on employers and the health care coverage they offer employees.

According to a recent study, employers have reported an average two percent increase in health plan enrollment in 2011 due to the age-26 mandate requiring them to extend dependent coverage to employees' children up to this age. In addition, a study just released by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET) found that 20 percent of all companies they surveyed, and 70 percent of the large companies, have enrolled additional adults in their health plans as a result of this mandate.

However, in contrast to reports that had projected up to 30 percent of employers would stop offering health coverage altogether in 2014 when state health insurance exchanges are supposed to open for business, more recent findings are much lower, showing that as few as eight percent are likely to drop coverage.

Rather than planning to drop coverage, it seems that many employers are looking for ways to continue offering health care plans that meet PPACA's essential health benefits requirements while also finding strategies to contain rising costs.

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Ceridian poll finds employers waiting
According to Ceridian's Health Care Compass reader poll in July 2011, many employers - 35 percent of respondents - are waiting and watching before making significant changes to the coverage they offer employees.

The next largest segment, 25 percent, anticipates that they will continue to offer employer-sponsored coverage, but they are looking for ways to control costs. It is also worth noting that 19 percent of Ceridian poll respondents say that they are considering dropping coverage - a number that falls squarely between recent 8 percent and 30 percent estimates.

Legal challenges to health care reform 
Complicating employers' decisions about health care are the various PPACA-related court cases making their way through federal appellate courts - with differing outcomes. In contention is the individual mandate, which would require most Americans to purchase some sort of health insurance or pay a fine.

Without this requirement, many experts believe that the rest of PPACA would also fall apart because the risk pool would not have enough healthy participants in it to keep coverage affordable for everybody.

"Declaring the individual mandate unconstitutional would be like removing the bottom card in a house of cards," said Jim O'Connell, Ceridian's executive consultant on legislative matters in Washington, D.C.

While the 6th U.S. Circuit Court of Appeals in Cleveland previously upheld the individual mandate as constitutional, the 11th U.S. Circuit Court of Appeals in Atlanta held the opposite-both by a narrow 2-to-1 majority. In addition, the 4th U.S. Circuit Court of Appeals threw out Virginia's high-profile challenge, dismissing the case on the grounds that Virginia lacked jurisdiction in the matter.

"The conflicting federal court rulings set the stage for a final decision by the U.S. Supreme Court, probably sometime next year," O'Connell said. In fact, on Sept. 26, 2011, the Justice Department chose to forgo an appeal to the 11th Circuit Court, which would have delayed the Supreme Court's involvement until at least 2013. Due to this turn of events, the Court will likely reach a decision on PPACA by June 2012.

The question of essential health benefits
In addition to the upcoming Supreme Court proceedings, employers are unsure what to make of an Oct. 7, 2011, report regarding essential health benefits (EHBs). The study, issued by the Institute of Medicine (IOM) and commissioned by the U.S. Department of Health and Human Services (HHS), establishes criteria and methods to define and update the EHB package to be included in most private health plans beginning in 2014 as required by PPACA - but does not present a specific list of benefits that would qualify. At this time, it appears employers will have to continue waiting to see how essential health benefits will affect the coverage they offer employees.