Lockton expert testified on Capitol Hill; most employers to continue health insurance

(Kansas City, MO) 1 Aug 2011 – Employers, according to Lockton Benefit Group president Michael Brewer, are remarkably committed to their employees. So much so, says Brewer, that even amidst the uncertainty of health reform and the opening of new insurance exchanges in 2014, most of Lockton’s clients who offer health coverage today plan to continue to offer group health insurance. However, the costs and administrative burdens of health reform could cause these same businesses to cut full-time jobs or limit their abilities to expand. That’s exactly what Brewer told lawmakers in Washington D.C. on July 28, 2011 while speaking at a hearing on the impact of last year’s healthcare reform law, for a Subcommittee of the Oversight and Governance Reform Committee of the U.S. House of Representatives.

Brewer testified that while more than 80 percent of employers responding to a recent Lockton survey about health reform indicated they would like to continue to offer group insurance, these employers still struggle with the cost and complexity of group plan administration, and that thus far the healthcare reform law has increased-not mitigated-costs and administrative burdens. Brewer told Congress, “One of our employers simply stated, ‘We operate our business on paper-thin margins and any additional government mandated costs will force us to either close the business or reduce the hours of our full-time employees.’ Now we know this is not the intent of health reform, but this is the result of health reform and this is the reality of health reform for many employers: job loss and reduction in employment opportunities,” said Brewer.

Only about 20 percent of employers, the Lockton survey indicated, will consider terminating their group health plans when the insurance exchanges open in 2014. But Brewer told the subcommittee that the other 80 percent overwhelmingly said the reason for their current commitment is a belief that they must offer health insurance to attract and retain the kind of employees they need. Brewer said that as the dominoes begin to fall-as other employers exit the group health marketplace, and this 80 percent of employers that now say they plan to continue to offer coverage begin to see that they do not have to offer health insurance to attract and retain the talent they want-there is likely to be a more substantial migration of employers out of the group insurance market. Brewer warned Congress that this could significantly skew Congressional Budget Office estimates on the number of Americans who are expected to seek federal subsidies to purchase insurance in the new insurance exchanges.

Click to review Brewer’s written testimony, provided in advance to the House Subcommittee, or click to view avideo of the Committee hearing (Brewer’s testimony begins at 34 minutes into the hearing.)

Click to view more informationabout Lockton’s employer survey results.

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About Lockton

More than 4,100 professionals at Lockton provide more than 15,000 clients around the world with insurance,benefits, and risk managementservices, offering an uncommon level of client service. From its founding in 1966 in Kansas City, Missouri, USA, Lockton has grown to become the largest privately held insurance broker in the world and 9th largest overall. Independent researcher Greenwich Associates awarded Lockton its 2011 Service Excellence Award for risk management for large companies.  Business Insurancehas twice recognized Lockton as a “Best Place to Work in Insurance.” You can learn more at www.lockton.com

 

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