HR Leadership Column

A World Without Open Enrollment?

The healthcare-reform law doesn't go into full effect until 2014, but many HR leaders believe that one of the results may well be the loss of employer-provided health benefits. And that loss will loosen one of the links employers have with their top talent.

Tuesday, September 7, 2010
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Human Resource Executive® recently published the results of a reader survey in a report entitled "What's Keeping HR Leaders Up at Night?" For many HR executives, it came as no surprise that 79 percent of respondents reported that their level of stress has increased during the past 18 months -- 33 percent say it has increased "drastically."

While the survey identified many reasons for the increased stress, the challenges and uncertainties created by enactment of the Patient Protection and Affordable Care Act certainly make a contribution: 44 percent of the respondents said they were spending the majority of their time on health and retirement benefit issues and 58 percent said that healthcare reform would have an extreme or significant impact on the time, energy and worry of their HR organization.

Estimates of premium changes for the 2011 plan year won't help anyone's stress level.

The National Business Group on Health in Washington, which represents large company members, reported last month that its members expect increased costs of almost 9 percent, up from 7 percent in 2010.

Small employers can expect to see even greater increases. The Council of Insurance Agents and Brokers reported in June that its members were seeing group health plan increases ranging between 11 percent and 20 percent for companies with less than 50 employees, and increases between 6 percent and 15 percent for employers with 51 to 500 employees.

But as HR executives grapple with communicating on the new healthcare legislation, 2011 premium increases and plan changes against a backdrop where many regulatory questions remain unanswered, they also need to be preparing for what the future of healthcare reform might look like. 

At this point, no one has a clear idea of all the implications of PPACA, and it will be years before major elements take effect. When they do, it may dramatically change the very notion of employer-provided healthcare.

HR executives need to be thinking now about what they may be communicating in future years.

Last week, the HR Policy Association in Washington circulated a white paper to its members on "Chief Human Resource Officer Concerns With the Patient Protection and Affordable Health Care Act."

The paper was drafted, based on member input and designed to provide policy-makers with the perspectives generally held by large employers regarding PPACA. HR Policy Association's membership consists of the chief human resource officers of 300 large employers that collectively spend more than $75 billion annually providing health insurance to millions of American employees, their dependents and retirees.

While the paper goes into detail about the organization's concerns with various aspects of PPACA, one section stands out because it suggests a future that HR executives need to be thinking about:

"Large employers doing business in the United States want their employees and retirees to have access to affordable, high-quality health care. At the same time, however, many employers worry that passage of PPACA represents the first major step down a path that within 10 years will result in healthcare no longer being provided through the employment relationship as it is today.

"They see the recently enacted law having strong incentives that, with each passing year, will encourage more employers to drop employer-provided care and prompt their employees to seek coverage through exchanges.

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"Employers may continue providing employment-based coverage in the near term, but once a few large employers begin dropping coverage, other employers are likely to follow their example as healthcare costs accelerate because of cost shifting.

"While there is a difference of opinion within the large employer CHRO community as to whether or not it would be good or bad for employers to drop coverage and for employees to receive insurance through health-insurance exchanges, there is general agreement that the trend will be away from employer-sponsored coverage over the next 10 years."

Many -- probably most -- HR executives will sit back and wait to see what unfolds with the new healthcare law, knowing that congressional elections over the next decade will lead to more legislative changes impacting healthcare costs and plan design.

But strategic HR leaders will also be doing some scenario planning, and considering a future where employer-provided health benefits have gone the way of defined benefit plans -- slowly disappearing.

They'll be thinking about what the social contract between employer and employee will look like in a world where employers no longer provide healthcare benefits to employees.

What will replace this tie that binds many employees to employers? What new strategies can be developed to attract talent and ensure continued employee engagement?

And what would the world be like without an open enrollment season?

Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.

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