Roll Call reports on federal employee union lobbying efforts to convince Congress to accelerate into this year age 26 coverage in the FEHB Program.
Milliman, a benefits consulting firm, released its last Medical Index last week finding that the “average total medical spending for its “typical American family of four” reached $18,074, an increase of $1,303 over last year. The total-dollar increase is the highest in the history of this study.”
Mercer, another benefits consulting firm, released a survey on employer reaction to PPACA’s immediate reforms including the age 26 change and the elimination of lifetime benefit maximums (which generally do not exist in the FEHB Program). “Many employers are bracing for higher health care costs resulting from compliance with health reform mandates that take effect with the 2011 plan year. According to a survey of nearly 800 employers released today by Mercer, the cost impact will range from moderate to severe, depending on the employer’s circumstances.” This, of course comes on top of the cost increases that Milliman found.
Towers Watson, another benefits consulting firm, released a survey on employer reaction to the 40% high cost plan excise tax that takes effect in 2018. The reaction is fear.
“The original concept of the excise tax was to penalize employers with excessively rich health benefit plans,’ said Randall Abbott, a senior consultant for Towers Watson. ‘Assuming even reasonable annual plan cost increases to project 2018 costs, many of today’s average plans will easily exceed the cost ceiling primarily directed at today’s ‘gold-plated’ plans.” * * *
“All it takes to drive costs above the excise tax cap for six in ten employers is an 8% average annual cost increase. And, without making plan design changes, that’s what many employers are projecting,” said Dave Osterndorf, a consulting actuary with Towers Watson. “This rate of increase has been typical for the past several years. We see it as an open question as to whether the recently passed PPACA will mitigate cost trends in the near term for employers.”
It’s not a pretty picture.