Employee health care challenging employers.

• Author: Brooks, Art
• Position: Benefits

A key element of the Patient Protection and Affordable Care Act (PPACA), which was signed into law by President Barack Obama in March 2010, is the creation of state health exchanges that will enable employers to opt out of providing employees with company-paid insurance for a fee.

The exact number of employers that will select this path remains somewhat controversial, particularly since this specific part of the legislation could be overturned. But, Lockton, a privately owned, independent insurance broker, notes that one in five employers says they will consider the state exchanges and pay the required fees.

Employees at those companies, in turn, would need to directly access and purchase coverage themselves. Corporations also will likely face added regulations and requirements as details emerge.

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Currently, about 20 percent of businesses with fewer than 100 employees do not offer health insurance, according to Employee Benefit Research Institute. And that number skyrockets when it comes to small business owners with fewer than five employees; 77 percent of those employers do not offer health insurance to their employees, according to Discover Small Business Watch, a monthly index polling small business owners, conducted by Rasmussen Reports.

At this point, the only certainty is that sweeping change is coming, change that will inevitably trigger important decision-making on the part of companies as to whether they insure their employees or defer to the new state exchanges. Yet, while the formal nature of health care reform and increased government involvement brings uncertainty, it's obvious that health care was being reformed, even before formal government intervention.

Benefits Challenges for Employers

Many would argue that the current health care system is broken in many respects--from being highly expensive and inefficient to not including certain services and excluding individuals with preexisting conditions. The cost of benefits has been growing at a fast pace.

A recent survey of large companies by the National Business Group on Health found that employers estimate their health care benefit costs will increase by an average of 8.9 percent this year, compared with an average increase of 6.9 percent last year. According to human resources and outsourcing consulting firm Hewitt Associates, the average total health care premium per employee for large companies will be $9,821 in 2011--up from $9,028 in 2010.

Even as many Republicans in Congress attempt to repeal the health care law, the consensus is that some level of...