A Futurist Past

Salisbury

Salisbury

By Dallas Salisbury, EBRI

At EBRI’s 35th anniversary policy forum last December, it occurred to me that one of the youngest minds in the room happened to belong to the oldest panelist we had invited. Arnold Brown, 87 when he spoke at our forum, was nationally renowned not only for his insightful observations about the future, but his often surprising predictions of how the American labor force—and the employment-based benefits on which they depend—might change in response. How fitting that the forum panel on which he participated was titled “The Road to Tomorrow.”¹

So I was especially saddened to hear of his recent passing, shortly before his 88th birthday. He died surrounded by family, who described him as “brilliant, witty, wise and generous.” Having followed him and his work closely in my own career, I would agree with all that and more.

At a time when news reports warn of the “technological divide” between the young and the old in this country, Brown’s specialty was using hard data to help us understand why and how technology is changing our lives. Ironically for a tech-head, he started out as an English major (he graduated with honors from UCLA), before going on to serve in the Navy.

Arnold Brown

Arnold Brown

His big break on the national stage came when he was vice-chairman of the American Council of Life Insurers, where in 1969 he created ACLI’s Trend Analysis Program. This was the first, and considered among the best, “environmental scanning programs” that focused on long-range business planning and strategy. In 1977, he formed his own company, Weiner, Edrich, Brown, Inc., consultants in strategic planning and the management of change, where many of the biggest companies in the world would become clients. Not surprisingly, he served as board chairman of the World Future Society.

Much of his recent work focused on the trend toward “deskilled workers,” as more and more employers turn to computers, software, and robots to replace both blue-collar and white-collar human employees. He pointed out the many ripple effects that is already having and will have going forward, especially on state and federal social insurance programs that depend on taxes drawn from employment payrolls to survive. As workers are increasingly replaced by robots, Brown asked at the EBRI forum, “Should we require employers of robots to pay Social Security for them?”

Among his other thought-provoking, data-driven points at the EBRI forum:

  • The prolonged recession has masked what he called a “profound transformation of the economy” driven by automation, one that has to do with the very nature of work and jobs as the nation moves into the future. In 2012, he noted, approximately 85 percent of robots were purchased were for manufacturing purposes, and within the next few years 30 percent or more of robots will be for non-manufacturing, white-collar use.
  • Part-time, contract, and temporary workers are becoming the norm worldwide. Brown noted that in France in 2012, 82 percent of the new jobs created were temporary, and in Germany, what are referred to as “mini jobs” (low-paid, short-term jobs) now comprise 20 percent of all jobs in that economy. Another aspect of this job trend: Of the 16-to-25-year-old cohort not currently in school, barely a third (36 percent) have full-time jobs, and a major reason for this is new technology (such as 3-D printing), he said.
  • The upshot is that “The old model of the contract between employer and employee is increasingly obsolete,” Brown said at the EBRI forum, and “more and more, we will need a new model of what the relationship will be between the employer and the employee.” Over the next 35 years, he predicted, there will evolve “an entirely different, unprecedented relationship in the workplace between employers and employees, and what the consequences of that will be are really very profound in terms of what your businesses will be facing.”

Professionally, I greatly admired his acute use of data to make highly informed analysis about the future. Personally, I deeply admired how someone almost in his 90s lived so much in the future.

In Washington, there is naturally great attention given to how federal law (particularly tax law) and regulation affect business and employee benefits. But Arnold Brown’s focus was elsewhere: How the economy—and the underlying technology and skills that drive it—affect not only the business world, but society as a whole, faster and far more powerfully than even government policy.

His keen mind and often accurate predictions will be missed.

Notes

¹ The complete report on the EBRI 35th anniversary policy forum, “Employee Benefits: Today, Tomorrow, and Yesterday,” is published in the July EBRI Issue Brief and is online here.

“Reference” Points

Nevin Adams

Nevin Adams

By Nevin Adams, EBRI

We started setting money aside for our children’s college education relatively early, but as they began actually considering their options, it was clear that our savings wouldn’t be enough to cover the expense at some of the schools on their lists. Moreover, while all three wouldn’t all be in college at the same time, there was enough overlap to make it “complicated.”

While we didn’t want to limit our kids’ college choices, we had certain real world constraints—and so we told them how much we could contribute to their college expenses, and that they were free to make up the difference between that figure and the actual expense of the college they chose through their own work, scholarships, and/or debt. As a practical matter, defining our “contribution” may have taken some options off their lists, but, certainly in hindsight, it seemed to give them focus and some real-world context—a reference point—for one of the biggest financial decisions of their lives.      

Employers have been interested in and have tried to implement the “defined contribution” concept for health benefits in a number of different ways. The Revenue Act of 1978 started it with Sec. 125 and flexible spending accounts and “cafeteria plans.” A recent EBRI Issue Brief outlines some of the more recent history, the introduction of health reimbursement arrangements (HRA) in 2001, health savings accounts (HSA) in 2004, and the more recent trend toward private health insurance exchanges, where employers provide a fixed amount of money for workers to use toward the cost of health coverage.

However, the primary focus of the report is another defined contribution approach called reference pricing (RP), under which plan sponsors either pay a fixed amount or limit their contributions toward the cost of a specific health care service. If a plan member chooses a health care provider or service that costs more, he or she must pay the difference in price. Reference pricing is receiving more attention and consideration today because of growing plan sponsor interest in managing health care costs, but the approach is still relatively new; in 2012, 11 percent of employers with 500 or more workers were using some type of RP, and another 16 percent were considering it.

How might such an approach impact cost? EBRI’s analysis indicates that the potential aggregate savings could reach $9.4 billion if all employers adopted reference pricing for the health care services examined in the paper, some 1.6 percent of all spending on health care services among the 156 million people under age 65 with employment-based health benefits in 2010.

As the report notes, savings from reference pricing materializes through the combination of 1) patients choosing providers at the reference price, 2) patients paying the difference between the reference price and the allowed charge through cost sharing, and 3) providers reducing their prices to the reference price. Obviously, any increase in prices among providers below the reference price would reduce the potential for savings.

From an employer perspective, the approach establishes a cost threshold for the service(s) selected, but as the EBRI analysis notes, plan sponsors should obviously consider a number of issues as they weigh adopting reference pricing, including how the reference price is determined and how providers may react. Communication to plan members is also key to effective use of reference pricing.

For plan members, it could represent the potential for expanded choice with some pricing context—but, as with my kids’ college selection process, they’ll likely need more data on prices and quality in order to make truly informed decisions.

Notes

The full report is published in the April EBRI Issue Brief, “Reference Pricing for Health Care Services: A New Twist on the Defined Contribution Concept in Employment-Based Health Benefits” available online here.

Hind “Sleights”

By Nevin Adams, EBRI

Nevin Adams

Nevin Adams

In recent days, we have commemorated both the 50th anniversary of the assassination of President Kennedy, and the 150th anniversary of the Gettysburg Address. Occasions such as these are natural opportunities for us to look back and reflect on the past—to consider what has happened since—and to consider what might have been.

As imperfect as our perception of current events can be, so-called 20/20 hindsight isn’t always what it’s cracked up to be, either. Even for those who were “there,” memories can be shaped or influenced by the passage of time, the perspectives of others, media coverage, and the like.

In the world of employee benefits, if you’ve ever said (or intimated) that traditional pension plans in the private sector were once widespread,¹ that health care insurance exchanges are a new concept,² or that 401(k)s were a legislative “accident” discovered (and promoted) by a single “father”—well then, you’re likely contributing to the confusion about the realities of the past that can obscure an appreciation of the present, and a clearer vision for the future.

Next month we’ll be commemorating EBRI’s 35th anniversary,³ and on Dec. 12 we’ll also be conducting our 73rd policy forum. A series of expert panels will be considering the state of employee benefits—as it was, as it is, and as it is likely to be. We’ll have the perspectives of those who have been directly involved in the development and execution of policies at the dawn of ERISA, who have both negotiated and navigated the subsequent regulatory, operational, and legislative shifts, and futurists who are helping anticipate (and perhaps shape) the next generation of employee benefit plan designs.

Hindsight—insights—foresight. It’s a unique combination. You’ll want to be “there.”

Join us.

The agenda for EBRI’s 73rd policy forum (and registration details) are online here. Attendance is free but space is limited.

Notes

¹ See “The Good Old Days,” online here.

² See “Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?” online here.

³ For additional insights, see the Fall 2013 EBRI President’s Report from Dallas Salisbury, online here.

“Churn” Factors

By Nevin Adams, EBRI

Adams

Adams

British Statesman and Philosopher Edmund Burke famously commented that “”Those who don’t know history are destined to repeat it.”(1) Indeed, those with experience working with employee benefit plans, can attest to a certain déjà vu-esque quality amidst the recent discussions about tax reform, limiting deductions, and “capping” contributions. These, are, in many ways, old “solutions,”(2) albeit these days arguably applied to a new (or at least different) set of circumstances.

As the 113th Congress begins its work, and the Obama administration readies for a second term, it is perhaps not surprising that the nuances of employee benefit plans and their tax treatment might not be an area of expertise for many on Capitol Hill. However, for all the longevity in tenure frequently assumed regarding those in Congress, a review of the data shows just how much turnover has taken place.

For example, you might not be surprised to learn that no member of the current Senate was in office when Medicare, or even ERISA was signed into law. But, as EBRI President and CEO Dallas Salisbury noted recently for the EBRI Board of Trustees, just three of the current 100 members of the Senate were there when Sec. 401(k) became law, and only 10 were there when the Tax Reform Act of 1986 became a reality. Fewer than half of the Senate were in their current office when the Pension Protection Act of 2006 passed.(3)

The implications for policy making in the midst of that kind of turnover are significant for employers and employees alike. Moreover, in an environment where expanding the transferability of Roth 401(k) balances is positioned as a revenue-generating mechanism to stave off sequestration, it seems increasingly obvious that every item of potential revenue or cost savings will be viewed through a new prism of scrutiny, where the short-term cost of the benefit may well trump the long-term value. And, as the data above suggests, by many who come to these deliberations without the full understanding and appreciation that experience in these complicated matters—a “history”—can provide.

One of EBRI’s founding principles in 1978(4) was the acknowledgement that “an ongoing need exists for objective, unbiased information regarding the employee benefit system, so that decisions affecting the system may be made based on verifiable facts.” And, as EBRI approaches its 35th anniversary, it’s clear that that need for information, and its critical role in making thoughtful decisions, remains undiminished.

Senate.Turnover

BensPolicyEd

Notes

(1) A century later George Santayana would write in his “Reason in Common Sense, The Life of Reason, Vol.1,” that “Those who cannot remember the past are condemned to repeat it.”

(2) In fact, a 1993 EBRI Issue Brief titled “Pension Tax Expenditures: Are They Worth the Cost?” cites a 1991 National Tax Journal article that observed, “Whereas the case for employer-sponsored pensions as an institution is strong, the case for a major tax expenditure is weak…given the demands on the budget, eliminating a tax expenditure that benefits a declining and privileged proportion of the population should be given serious consideration.“ See “Pension Tax Expenditures: Are They Worth the Cost?” online here. 

(3) See chart below, which tracks Senate turnover, by party, since 1975.

(4) See Facts about EBRI, online here. 

Most Workers Would Look for Alternatives if Health Benefits Are Taxed

What if Congress decides to start taxing workers’ health benefits as a means to raise revenue as part of an effort to rein in the federal deficit? More than half of American workers would either switch to a less costly plan, shop around, or drop coverage, according to new research from EBRI.

The 2012 EBRI/MGA Health Confidence Survey (HCS) finds that if current tax preferences were to change and employment-based coverage became taxable to workers, 26 percent would want to switch to a less costly plan, 21 percent say they would want to shop for coverage directly from insurers, and 9 percent say they would want to drop coverage altogether.  However, nearly 4 in 10 (39 percent) individuals say they would continue with their current level of coverage, up 10 percentage points from last year’s HCS findings.

While changes resulting from the Patient Protection and Affordable Care Act (PPACA) have raised concerns as to whether employers will continue to offer health coverage in the future, the 2012 HCS finds that health benefits remain a key a factor for workers in choosing a job, and health insurance in particular continues to be—by far—the most important employee benefit to workers.

“Most Americans are satisfied with the health benefits they have now and prefer not to change the mix of benefits and wages,” said Paul Fronstin, director of EBRI’s health Research and Education Program and author of the report. “About three-quarters say they are satisfied with the health benefits they currently receive, while 15 percent say they would trade wages to get more health benefits, and 9 percent say they would surrender health benefits for higher wages.”

Full results of the 2012 Health Confidence Survey are published in the December 2012 EBRI Notes, “Views on Employment-Based Health Benefits: Findings from the 2012 Health Confidence Survey,” online at www.ebri.org

The HCS examines a broad spectrum of health care issues, including Americans’ satisfaction with health care, confidence in the future of the nation’s health care system and the Medicare program, as well as their attitudes toward certain aspects of health care reform.

Notes.Dec12.HCS.Fig5

Employment-Based Health Coverage Continues Decline; Uninsured Rate Shrinks as Public Coverage Grows

The uninsured rate for working-age Americans ticked down in 2011, but only because public program coverage grew faster than employment-based health insurance coverage declined, according to a new report by EBRI.

While employment-based health coverage is still the dominant source of health insurance in the United States, it has been steadily shrinking since 2000. The latest data show that it continued to do so last year.

The EBRI analysis finds that the percentage of the nonelderly population (under age 65) with health insurance coverage increased to 82 percent in 2011 (up about half a percentage point from 2010), which is notable since increases in health insurance coverage have been recorded in only three years since 1994.

However, different trends are taking place behind that overall result: Among the nonelderly population, employment-based coverage is trending down (58.4 percent had employment-based benefits in 20011, down from the peak of 69.3 percent in 2000), while public-program coverage is trending up (accounting for 22.5 percent of the nonelderly population, up from the low of 14.1 percent in 1999).

Enrollment in Medicaid (the federal-state health care program for poor) and the State Children’s Health Insurance Program (S-CHIP) increased to a combined 46.9 million in 2011, covering 17.6 percent of the nonelderly population, significantly above the 10.2 percent level of 1999. Other sources of public health insurance include Medicare (which covers many disabled as well as the elderly), Tricare, CHAMPVA, and Veterans Administration (VA) health insurance.

Full details of the EBRI report, “Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 2012 Current Population Survey,” are published in the September 2012 EBRI Issue Brief, no. 376, online at www.ebri.org  The report is based primarily on the March 2012 Current Population Survey (CPS) conducted by the U.S. Census Bureau, with some analysis based on other Census surveys.

The full report is online here. The press release is online here.

The Impact on the Uninsured of the Baby Boom Generation Reaching Age 65

By Paul Fronstin, EBRI

This week the Census Bureau released its annual report on income, poverty and the uninsured. The number of uninsured increases naturally because of population growth even when the percentage declines, but in 2011 both the percentage of the population and the number uninsured declined: Between 2010 and 2011, the percentage uninsured fell from 16.3 percent to 15.7 percent and the number fell from 50 million to 48.6 million. In fact, 2011 was only one of four years since 1994 that saw a decline in the percentage uninsured.

Click to enlarge

Why did both those measures fall in 2011?

Some segments of the population did see an increase in employment-based coverage, notably young adults taking advantage of the adult dependent mandate in the Affordable Care Act (ACA), but these gains were offset by other loses (such as the decline in coverage from one’s own job for workers of all ages), negating any impact on the aggregate decline in the uninsured. The percentage of the population with employment-based health benefits stood at 55.1 percent in 2011, compared with 55.3 percent the previous year, so it would not account for the decline in the uninsured.

There was growth in the number of people covered by Medicaid and SCHIP (the State Children’s Health Insurance Program). In 2011, 16.5 percent of the population had Medicaid or SCHIP, up from 15.8 percent in 2010. So this increase accounted for some of the decline in the uninsured.

Overall, the decline in uninsured was largely associated with a rise in the share of people covered by government-sponsored health plans, increasing to 32.2 percent in 2011 from 31.2 percent in 2010.

Coincident with this trend, it’s worth noting that the leading edge of the Baby Boom generation (the cohort of individuals born between 1946‒1964) turned 65 in 2011, meaning that this generation is finally reaching Medicare eligibility.

Statistically, 65-year-olds have now reached 1 percent of the total U.S. population. While not yet a large number, it is the largest in recent history, driving up Medicare enrollments, and perhaps marking the cusp of a significant demographic shift in insurance trends.

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“Essential” Information

By Nevin Adams, EBRI

Nevin Adams, EBRI

About a month ago, the Department of Health and Human Services (HHS) released a bulletin outlining proposed policies that it said would “give states more flexibility and freedom to implement the Affordable Care Act.”

It did that by proposing to allow individual states to select a single benchmark to serve as the standard for qualified health plans inside the health exchange operating in their state—and for the plans offered in the individual and small-group markets in their state. The Patient Protection and Affordable Care Act (PPACA) requires that health insurance plans offered in the individual and small group markets, both inside and outside the “Affordable Insurance Exchanges” (Exchanges), offer a comprehensive package of items and services, known as “essential health benefits.”(1) This benchmark would set the standard of the items and services included in the essential health benefits package called for in PPACA.(2)

Acknowledging that “[t]There is not yet a national standard for plan reporting of benefits,” HHS also noted that PPACA does not provide a definition of “typical,” and it therefore gathered benefit information on large employer plans (which account for the majority of employer plan enrollees), small-employer products (which account for the majority of employer plans), and plans offered to public employees.(3)

However, in releasing its proposal, HHS noted that “[n]ot every benchmark plan includes coverage of all 10 categories of benefits identified in the Affordable Care Act” and that “the most commonly non-covered categories of benefits among typical employer plans are habilitative services, pediatric oral services, and pediatric vision services.”

However, HHS did at least suggest some boundaries, noting that states “would choose one of the following health insurance plans as a benchmark”:

• One of the three largest small group plans in the state;(4)

• One of the three largest state employee health plans;

• One of the three largest federal employee health plan options;

• The largest HMO plan offered in the state’s commercial market.

HHS is soliciting public input on this proposal – though comments are due by January 31, 2012. You can send comments to EssentialHealthBenefits@cms.hhs.gov

The essential health benefits bulletin is online here.

A fact sheet on the essential health benefits bulletin is online here.

The Institute of Medicine’s report on Essential Health Benefits is online here.

Note: The HHS bulletin addressed only the services and items covered by a health plan, not the cost sharing, such as deductibles, copayments, and coinsurance. HHS noted that the cost-sharing features will be addressed in future bulletins and cost-sharing rules will determine the actuarial value of the plan.

See also Paul Fronstin and Murray N. Ross, “Addressing Health Care Market Reform Through an Insurance Exchange: Essential Policy Components, the Public Plan Option, and Other Issues to Consider,” EBRI Issue Brief, no. 330, June 2009.

Endnotes

(1) Beginning January 1, 2014, qualified health plans sold in health insurance exchanges must cover all essential benefits. In addition, new plans sold in the individual and small group markets must cover essential benefits, regardless of whether plans are sold inside or outside of state health insurance exchanges.

(2) The following benefit classes are identified as essential benefit classes: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; pediatric services, including oral and vision care.

(3) HHS noted that it has considered a report on employer plans submitted by the Department of Labor (DOL), recommendations on the process for defining and updating EHB from the Institute of Medicine (IOM), and input from the public and other interested stakeholders during a series of public listening sessions. In 2010, Paul Fronstin, director of EBR’s Health Research & Education Program, was appointed to the Institute of Medicine (IOM) Committee on Determination of Essential Health Benefits. For more information on the essential benefits proposal, you can contact him at fronstin@ebri.org

(4) An “Illustrative List of the Largest Three Small Group Products by State” was just published by HHS, online here.

Understanding Employer Surveys That Address the Future of Employment-Based Health Coverage

Paul Fronstin, EBRI

Fronstin

The June 2011 release of a report by McKinsey created a firestorm over the impact that PPACA may have on whether employers offer coverage in the future.  McKinsey reported that “30 percent of employers will definitely or probably stop offering ESI [employer-sponsored insurance] in the years after 2014.”

Republicans responded by calling into question initial projections that very few people would lose employment-based coverage. Karl Rove, for example, reflects the sentiments of Republicans when he recently wrote in the Wall Street Journal (subscription required): “We are now, to our horror, finding out how harmful this measure is.”  The administration referred to the report as an “outlier” and described it as “raising more questions than answers.” Congressional Democrats pressured McKinsey into releasing more information on the methodology, which it eventually did.

What Did McKinsey Really Find?

While the original headline referred to the 30 percent estimate, much more detailed results were eventually released:

As seen in the table above, McKinsey found that only 9.2 percent of employers reported that they definitely would eliminate coverage.  Among employers with 500 or more workers, only 5.1 percent reported that they would definitely drop coverage.

An important question is how to interpret the 20.5 percent of employers who report that they probably would drop coverage.  If focusing only on the percentage of employers reporting that they definitely would drop coverage, the McKinsey estimates are more in line with other surveys. For instance:

• April 2010, Workforce Management Magazine found that 5.2 percent of employers somewhat disagreed and 3.5 percent strongly disagreed with the following statement: “We Will Continue to Offer Our Own Health Care Coverage Because It’s a Crucial Part of Our Recruiting and Retention Efforts.”
• May 2010, IFEBP found that 2.4 percent disagreed and 1 percent strongly disagreed with the following statement: “My Organization Will Continue to Offer Health Care Benefits Because They Are Critical to Employee Recruitment and Retention.”
• May 2010, Towers Watson found that 3 percent of organizations will likely “pay” [to stop offering health benefits] and not “play.”
• June 2010, Fidelity found that 20 percent of employers were seriously considering eliminating health care.
• September 2010, HR Policy Association found that 19 percent of companies surveyed were not likely to be providing health coverage in 2020. Perhaps more honestly, 47 percent reported that were not sure.
• March 2011, HR Policy Association found that 6 percent of employers were giving serious consideration to discontinuing providing health care benefits over the next 10 years.
• May 2011, IFEBP found that 2.7 percent of employers are considering terminating health care programs for active employees as a result of reform. Another 0.7 percent plan to “pay” and not “play.”
• June 2011, Lockton found that 18.8 percent of employers will consider terminating group health plan and pay penalties when the “pay-or-play” mandate takes effect in 2014.
• April–May 2011, the NFIB found that 26 percent of small employers currently offering health benefits are very likely to explore dropping their health insurance plans and another 31 percent are somewhat likely to do so if workers dropped employment-based coverage for insurance in the exchange. The survey also found that a key factor in a small employer’s decision to drop a current health insurance plan will be the proportion of employees who leave their health plan for an exchange. Forty-three percent report that a majority of employees would have to leave before they would drop their plan and 35 percent claim it would require all of them.
• June 2011, Mercer found that 2 percent of employers were very likely to terminate coverage and 6 percent were somewhat likely to terminate coverage after health insurance exchanges are operational.

It’s the Dynamics, Stupid
What is more important—the percentage of employers no longer offering health coverage in 2014, 2020, or 2025?  A recent report from Avalere assessed the validity of differing estimates of the effect of PPACA on employment-based coverage.  Its analysis concluded that the employment-based market will be fairly stable after 2014, when key PPACA coverage provisions go into effect.  However, the most important statement in the report may be the following:

“While near-term changes in aggregate ESI rates are unlikely, longer-term erosion—over 10 to 20 years—is possible under certain circumstances. … if a few [emphasis added] large employers drop coverage after 2014, others could follow in a “me too” effect. Both of these scenarios are difficult to model, but should be considered.”

As noted above, the fact is a number of surveys have found a small number of employers plan on dropping coverage in 2014 or thereafter.

The most important take-away may be the fact that none of the surveys found the percentage of employers that are likely, considering, not likely, agreeing, or disagreeing with the various questions to be zero.  Whether it be the small number that plan on paying instead of playing, the small number giving serious consideration to dropping coverage, or the small number that disagree that they will continue to provide coverage, trends in employment-based coverage start with small numbers. The movement away from defined benefit pension plans to defined contribution (401(k)-type) retirement plans did not happen overnight.  Neither did the movement to managed care or consumer-driven health benefits.

These are all examples of changes to benefits that may not be indicative of what might happen as a result of PPACA; but  the movement away from providing retiree health benefits (an elimination of a benefit) also did not happen overnight.  These changes took years, some would say decades, to play out and there is no reason to believe that 2014 will look much different from 2013 or 2011 in terms of whether or not employers offer health coverage.  But, as Avalere concluded, it only takes a few employers to trigger a change, and the sentiment in the surveys certainly supports that:

• June 2010, Fidelity found that 26 percent of small employers and 36 percent of large employers would seriously consider eliminating health care if other employers did.
• September 2010, HR Policy Association found that 80 percent reported that other companies moving away from health coverage would influence their decision to offer coverage.
• June 2011, the Benfield Group found that 21 percent were highly likely and 49 percent somewhat likely to drop coverage if their industry competitors stopped offering health benefits.

Are Surveys of Employer Opinions on Future Behavior Valid?
It is very difficult to address employer behavior through a survey.  Past surveys of employers have not accurately predicted behavior.  For example, in March 2004, a web-based survey of 991 mostly large employers found that 19 percent were very likely and 54 percent were somewhat likely to offer a health savings account (HSAs) by 2006.  In reality, only 11 percent of large employers offered either an HSA or a health reimbursement arrangement  (HRA) by 2006, with 37 percent of jumbo employers offering them and 6 percent of employers with 500-999 workers offering them, according to Mercer.  By 2010, only 23 percent of large employers offered either type of plan, still far below the survey findings from 2004.

There are many issues that employers will consider when weighing the pros and cons of dropping coverage.  Some are as follows:

• Is there a concern about recruitment and retention?
• Is there a concern about the impact on worker health and productivity?
• Will the health plans offered in the exchange be an acceptable substitute for employment-based plans?
• Will dropping coverage really save money?
• What are other employers doing?

There is no reason to believe that any survey conducted today can be used to determine the percentage of employers that might be dropping coverage three or more years from now as a result of a major component of health reform—insurance exchanges combined with insurance market reforms—that is still years away from being up and running.