In ironic timing, Walecia Konrad at the New York Times, in a personal finance column that appeared in the paper's Saturday print edition and which was probably written shortly before IBD's report, inadvertently revealed that ObamaCare itself may be a reason why employer "relinquishments" over the next three years come in well above the mid-range estimates in the table:
As in years past, employers are also grappling with how to offset rising health care costs. Recent years have brought an average cost increase of about 9 percent, said Tracy Watts, a partner at Mercer Health and Benefits. In most cases, companies have been able to absorb about 6 percentage points of those cost increases a year, passing the rest onto employees.
This year Ms. Watts estimates that changes made in response to the health law will add an extra 2 to 3 percent in cost increases, pressuring employers to engage in even more cost-sharing with employees — whether through higher premiums, co-payments or other out-of-pocket costs.
(Senior vice president at Fidelity Consulting Services Pearce) Weaver also reports increased interest by employers in high-deductible insurance plans. “They’ve been effective in managing costs,” he said.
The estimates tabulated above are based on a review of employer plan design changes made from 2008 to 2009. The government did not attempt to look at what might have happened if "an extra 2 to 3 percent" in ObamaCare-driven costs had been piled into the mix.
Facing a higher mandated cost structure even beyond increases in the cost of health care services, many employers will find themselves unable to redesign their plans within ObamaCare's tight grandfathering constraints while remaining competitive (or possibly viable), and will choose to relinquish, i.e., "de-grandfather."
The government's document says that a de-grandfathered employer has two choices:
"Significantly change the terms of the plan or coverage and comply with Affordable Care Act provisions from which grandfathered health plans are excepted; or in the case of a plan sponsor, cease to offer any plan."
To "comply with Affordable Care Act provisions," an employer would have to offer a plan with ObamaCare’s specified minimum coverage levels, which are far higher and far more expensive than typical private plans, or, conceivably, offer coverage that is even better.
Left unstated by the government is the fact that employers above a certain very small workforce threshold who "cease to offer any plan" must pay a payroll-based penalty for not doing so.
Unless I'm missing something, the government's grandfathering regs as drafted also close off the "high-deductible plan" option Konrad cited above. That's because, as IBD reported, an employer plan will be de-grandfathered if:
Beyond that, the ObamaCare-driven "extra 2 to three percent" to which the Times's Konrad refers above may be low. One mandate alone may (I would say probably will) cause costs to increase by about that amount. This was explained in a May 25 item found at the Society for Human Resources Management (bold is mine):
The Department of Health and Human Services (HHS) released estimates in May 2010 of the costs and benefits of the requirement to cover adult children up to age 26, as part of a regulation directing employers and insurers on how to carry it out. The new benefit is estimated by HHS to cost $3,380 for each dependent, raising premiums by 0.7 percent in 2011 for employer plans, according to the department's mid-range estimate. Some 1.2 million young adults are expected to sign up, more than half of whom would have been uninsured.
... there are concerns about the impact of adverse selection with this population. That is, prior to 2014 when all Americans must secure health care coverage, healthy young adults may chose to forgo coverage through their parent's plan, while the estimated one in six young adults with chronic health issues would be the most likely to accept coverage under their parent's plan. This self-selection for coverage by the least healthy could result in higher coverage costs than the estimates presented above.
... Bruce Davis, health and group benefits national practice leader at HR consultancy Findley Davies ... said as of May 2010 his firm is forecasting an additional cost increase of 2 to 2.5 percent to account for the unknown cost of adding adult children, and an overall health care cost trend increase of around 11 percent for 2011.
Cross-posted at BizzyBlog.com.