Five Things CEOs Should Know About Health Care Exchanges

Forbes reports:

“Now that the 2012 presidential election is in our rear-view mirror, the Affordable Care Act (aka “Obamacare”) looks like it’s here to stay. With it comes an interesting decision for chief executive officers to make by 2014: Should your company keep its current health care plan, or opt out and allow employees to enter into consumer-directed health care exchanges?

Certainly, there is much at stake for C-level executives when it comes to health care reform and health care coverage in general. According to a 2012 study from Towers Watson, in 2013 the average cost of health benefits per employee will stand at $11,507, a 5% increase from 2012.

That’s enough to induce sticker shock in the most battle-hardened CEO. Perhaps not surprisingly, a separate study from Aon Hewitt shows that 40% of employers fully expect to participate in health care exchanges in the next three to five years – presumably to save money.

Of course, that means 60% of employers either aren’t interested in health care exchanges or don’t have fully developed plans to allow their employees to enter one.

What should CEOs focus on when it comes to health care exchanges? Here are five things to know before you make any big decisions.

1. Do the math first. With the Affordable Care Act, companies that have their employees enter into health care exchanges on their own can expect to pay up to $2,000 per employee in fines to Uncle Sam (but only after a 30-employee exemption is cleared first). Those fines will roll out in 2014, and analysts say the $2,000 penalty should rise in the years after that. Even so, with per-employee health care costs currently at $11,500, a CEO has to wonder – what’s the downside of paying a smaller penalty instead?

2. Consider hybrid plans. The Towers Watson report says that most company decision-makers want to keep health care in the corporate family, as they consider attractive benefits a solid recruitment tool for quality employees. What executives are increasingly doing is opting for consumer-directed health plans, merging health savings accounts with high deductible plans. Over 60% of companies offer such plans, which are less expensive than traditional health care plans. But 80% say they will offer hybrid plans by 2015, after health care reform is largely in place.

3. Note the hours-per-work threshold change. Employers must provide health benefits for employees who work full-time, which the Affordable Care Act has redefined as 30 hours per week (down from 35). This may leave some CEOs in a quandary. If you have employees working between 30 and 35 hours per week, you can either cut those employees to under 30 hours (and avoid the $2,000 penalty) and shepherd them toward the health care exchanges, or provide health care coverage to those employees.

4. What does your governor think? Governors in Texas, Kansas, Virginia and other states have strongly implied they won’t play ball with the federal government, and won’t have their states comply with the health care exchange mandate. If your company is headquartered in a state where exchanges have to clear statewide obstacles, it may be hard to rationalize a huge health care budget strategy, one way or the other.

5. Health care companies want you to use health care exchanges. Big health care services providers are betting that the future is ripe for health care exchanges, and that you’ll eventually allow your employees to walk to a private exchange. Aon Hewitt has already established its own health care exchange specifically for mid-sized and larger businesses–and has welcomed big-name corporate clients like Sears into its fold. Expect the “visibility factor” for health care exchanges to increase, giving your employees more options with exchanges in 2014 than you ever thought possible in 2012.

These aren’t the only factors you’ll deal with as 2014 draws nearer and health care reform becomes reality. But they are factors that should, right now, be at the top of your health care exchange “to know” list.”