Health Care Reform: Full Steam Ahead - Study of Employee Benefits Today & Beyond Eighth Annual
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Eighth Annual Study of Employee Benefits Today & Beyond Health Care Reform: Full Steam Ahead The Prudential Insurance Company of America (Prudential) 751 Broad Street, Newark, NJ 0255594-00001-00
Employers have taken more action this year regarding benefits as
a result of the increased impact of health care reform.
Last year’s results suggested that employers were either not acting or just beginning to act in the wake
of the Supreme Court’s decision upholding the Affordable Care Act. With deadlines looming in 2014
and 2015, the story is much different this year. Health care reform has increasingly impacted both
employee benefits as well as the level of action taken by employers. Not surprisingly, the impact to health
insurance benefits has been notable, with 49% of employers saying they were extremely or very likely to
make a high deductible health plan the only health insurance option.
Employers are reporting increased impact of health care reform on various aspects of
employee benefits.
2012* 2013*
75%
Employee benefits funding
60 %
Number of employee
benefits offered 55 % 74%
Employee benefits service
and support 56 % 73%
Greater consumerism by employees
49 % 70%
Employee benefits communications
51 % 69%
* Percentage of employers saying “moderate” or “tremendous” impact.
Employers have started to take more action when it comes to managing their employee
benefits programs over the past year.
49%
46% 44% 43% 42%
27%
20% 21%
17% 18%
Scaling back Consolidating Switching Switching Consolidating
benefits offerings carriers or TPAs carriers or TPAs benefits brokers benefits brokers
n 2012 n 2013 * Percentage of employers saying they are currently implementing or have already implemented each of these actions.
2 I Eighth Annual Study of Employee Benefits: Today & BeyondEmployees anticipate positive and negative health care
reform outcomes.
Employees believe more Americans will be covered under the Affordable Care Act, with almost half of
full-time employees (43%) saying they believe more people will have health insurance—up 7 percentage
points from 2012. A growing number of employees (44%) say that fewer employers will offer health
insurance (a 13 percentage point increase from 2012). However, fewer believe it is unlikely their employer
will drop coverage (38%).
n omen see their health insurance as more secure: 43% of women (versus 34% of men) think it is
W
unlikely it will be dropped by their employer.
n Y ounger workers are slightly less likely to hold this view (4 in 10), and older workers more likely to hold
this view (46% to 48% for those in their 40s to 60s).
Employees increasingly believe fewer employers will offer health insurance.
Employers likely to cease offering health insurance
2013
44%
2012
31%
38 %
Current employer likely to cease offering health insurance
2013
18% of employees
believe it is unlikely
their employer
will drop health
insurance coverage.
2012
12%
n Likely n Somewhat likely n Unlikely n Don’t know
Health Care Reform: Full Steam Ahead I 3Familiarity with public and private health insurance exchanges
Top is about equal among employees.
rude About one-third of employees have heard of public or private exchanges, but do not know much about
them. Most (63%) report they do not participate in either type, while 16% were not sure. About 20%
of employees report that they have never heard of exchanges prior to our survey.
Employees are fairly evenly split on their opinion of exchanges.
u have to expand Public exchanges
nce to be able to 15% Favorable
e specific slices with
olors. I usually make 11% Unfavorable
10-20% darker than
Private exchanges
14% Favorable
11% Unfavorable
n Very favorable n Favorable n Neither n Unfavorable n Very unfavorable
4 I Eighth Annual Study of Employee Benefits: Today & BeyondDespite their somewhat neutral view of exchanges,
few employees would welcome migrating to one.
Of the employees that are aware of private exchanges, 21% had a favorable or very favorable view of
them and 56% found them neither favorable or unfavorable. Still, many employees report they would
be “very disappointed” (33%) if their company encouraged the use of an exchange to obtain health
insurance over their company’s current plan. Only about 8% of employees report that they would be
“somewhat optimistic” or “delighted” if their employer joined a private exchange. One in five “would
need more information” and were “not sure” (23%). When asked to rank what private exchanges
would need to prove to potential participants and employers to drive consideration, employees ranked
“insurance carriers that provide value” and “insurance carriers with good reputations” as the top two.
Ranking of employee drivers to exchange consideration
1 2 3 4
Insurance
carriers
that provide
Insurance
carriers Strong
5
value with good educational Wide
reputations materials product set Insurance
to help you carriers
decide on that have
the right plan excellent
customer
service
Employees indicate they would primarily be very disappointed if employers encouraged
private exchanges instead of their current health benefits.
Employer joined private exchange
12% Somewhat disappointed
33% Very disappointed
n Delighted n Somewhat optimistic n Neither n Somewhat disappointed n Very disappointed n Not sure, need to find out more
Health Care Reform: Full Steam Ahead I 5Brokers are evaluating the exchange opportunity.
Brokers were asked about their perspectives on private exchanges. Some things that came to light:
n They see the strongest growth opportunity over the next five years to be in the under-100 life market.
n A bout 40% of brokers say they are eager to sell health insurance on private exchanges and about
30% are eager to sell ancillary products on exchanges.
Brokers’ orientation toward working with private exchanges
28% Eagerly trying
to grow their
own business
42% Promoting based on
firm encouragement
n Promoting based on firm encouragement n Eagerly trying to grow their business n Reluctant to incorporate into practice n None
6 I Eighth Annual Study of Employee Benefits: Today & BeyondBrokers share their views on third-party administrators (TPAs)
and enrollment companies in relation to health care reform
and exchanges.
Brokers believe that TPAs and enrollment companies will benefit mutually from the rise in private
exchanges. They see exchanges growing in the next five years if the exchanges are sponsored by a TPA or
enrollment company.
In 2013, brokers also report an increased priority in partnering or merging with TPAs, with 26% saying
it is a “critical priority” and 41% saying it is a “priority” (10% and 37%, respectively, in 2012.) This
shows they also believe that aligning with a TPA will benefit their business in the wake of the health care
reform changes.
Private exchanges will
have strong growth in the
next 5 years when they
are sponsored by a TPA Private exchanges
or enrollment company will increase the
role of enrollment
companies 42%
Increase
11% 35%
Strongly agree Agree
26 %
of brokers say
that partnering
with TPAs is a
critical priority.
Health Care Reform: Full Steam Ahead I 7Methodology
The Eighth Annual Study of Employee Benefits: Today & Beyond was fielded via the Internet during August
and September 2013* and consists of three distinct surveys: one among employers, another among
employees, and the third among group employee benefits brokers and consultants. The year’s study was
conducted for Prudential by MRops in conjunction with Oxygen Research.
Overview of Employer Survey
Employer results are based on a national survey of 1,000 employee benefits decision makers. Respondents
included business executives, business owners, human resources professionals, and financial management
professionals. The survey sample covers all industries, including government, and is nationally
representative of all U.S. businesses with at least 25 full-time, benefits-eligible employees.
Data shown in this report is weighted to reflect the actual proportion of U.S. businesses by company size,
industry, and region based on data from the U.S. Census Bureau. The margin of error is +/- 3.0% at the
95% confidence level.
Overview of Employee Survey
Employee results are based on surveys conducted among 1,000 employees, ages 22 or older, who work
full-time for a company with at least 25 employees. The survey of employees was conducted during the
same time period as the plan sponsor and broker surveys.
The survey sample is nationally representative of all U.S. workers at companies with at least 25 full-time
employees. Data shown in this report is weighted to reflect the actual proportion of U.S. workers by gender,
region, race and ethnicity, education level, household income, and age based on data from the Bureau of
Labor Statistics and the U.S. Census Bureau. The margin of error is +/- 3.0% at the 95% confidence level.
Overview of Broker Survey
Broker/consultant results are based on surveys conducted among 318 insurance professionals. Additionally, 38
Prudential brokers also participated. Screening criteria ensured that these professionals spend a large portion of
their time selling and servicing plan sponsors. The margin of error is +/- 4.0% at the 95% confidence level.
*The surveys were fielded from August 8 through September 13, 2013.
8 I Eighth Annual Study of Employee Benefits: Today & BeyondAbout Prudential Group Insurance
Since 1916, Prudential Group Insurance, a division of Prudential
Financial, Inc., has been helping meet benefits challenges of
employers and employees across the United States. Today, we are
well recognized for manufacturing and distributing a wide range
of employer-paid and voluntary coverages, including group life,
accidental death & dismemberment, disability, critical illness,
and retiree and global solutions. Please contact your Prudential
representative or visit www.prudential.com/gi to find out more.
9Group Critical Illness Insurance coverage is a limited benefit policy issued by The Prudential Insurance Company of America, a Prudential Financial company, 751 Broad Street, Newark, NJ 07102. Prudential’s Critical Illness Insurance is not a substitute for medical coverage that provides benefits for medical treatment, including hospital, surgical and medical expenses, and does not provide reimbursement for such expenses. The Booklet-Certificate contains all details, including any policy exclusions, limitations, and restrictions, which may apply. If there is a discrepancy between this document and the Booklet-Certificate/Group Contract issued by The Prudential Insurance Company of America, the Group Contract will govern. A more detailed description of the benefits, limitations, and exclusions applicable are contained in the Outline of Coverage provided at time of enrollment. Please contact Prudential for more information. Contract provisions may vary by state. Contract Series: 114774. Group Insurance coverage is issued by The Prudential Insurance Company of America, a Prudential Financial company, 751 Broad Street, Newark, NJ 07102. © 2013. Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. 77310
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