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The 2014 health benefits survey released Thursday by the New Jersey Business & Industry Association reports that 87 percent of member companies still offer health care coverage to their employees — despite cost increases ranging from 24 percent at small firms under 25 employees, to 7.3 percent for those over 250 workers.And despite these cost increases that far exceed inflation, a large majority — 71 percent — said they aren’t likely to discontinue coverage. Asked why, 69 percent said they need to offer coverage to retain employees; 51 percent said it’s necessary to attract good workers; and 33 percent said their goal is improved employee health and productivity.

About 20 percent said they are considering dropping health benefits, and of those nearly all — 90 percent — cited cost as the reason.

“It is obvious that New Jersey employers want to continue offering health care benefits,” said NJBIA President Michele Siekerka. “Clearly, this is an important way of keeping existing employees as well as attracting new employees.”

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Fairleigh Dickinson University’s PublicMind Poll conducted the online survey on behalf of NJBIA. In total, 583 companies completed the questionnaire.

“There is some good news here in that employers want to offer coverage and they really don’t have plans in the short run to discontinue coverage — unless they can’t afford it, ” said Christine Stearns, NJBIA vice president for health and legal affairs. She said 85 percent of companies said their health care costs rose this year.

Stearns said the survey makes the point that rising costs threaten coverage and raises the question: “What do policy makers need to do to keep coverage within reach, particularly for small businesses?”

Stearns said a key question asked what steps employers are taking to afford rising health care costs. Among the answers: “It came out of their profits, they had to hold the line on salaries and they had to delay investments in the company,” Stearns said. “That shows what a priority health benefits are.”

David Oscar, a health insurance broker with Altigro, said, “I’m seeing lots of employers in the smaller group category, under 10 employees, drop coverage because they can’t afford it anymore.”

Oscar said of his 1,800 small employer clients, 400 dropped group coverage effective Jan. 1, 2014. Under the Affordable Care Act, individuals who qualify based on their income can get federal subsidies to buy individual health plans on the new exchange at HealthCare.gov. Oscar said a number of those 400 groups switched to the individual market and got subsidized coverage, while others dropped out altogether and no longer have health coverage.

Oscar said, “Startups and small, small businesses that are struggling right now in the economy” are among those opting to forgo health coverage.

In the NJBIA survey, small employers with fewer than 24 employees reported facing a 24 percent average increase this year and those with between 25 and 49 employees were hit with a 16 percent average increase.

The survey found employers are paying an average annual cost of $7,416 for single employee coverage; $11,352 for parent/child coverage; $15,660 for husband/wife coverage; and $19,116 for family coverage.

Employers said they pay nearly 80 percent of the cost of coverage for their employee, and pay about 50 percent of the cost of dependent coverage.

The survey found that, to meet the rising cost of coverage, 45 percent took a hit to their bottom line; 35 percent froze or limited wage increases; and 22 percent delayed business investments.

Employers said they used several different cost containment strategies: 53 percent increased deductibles, 29 percent increased employee contributions, 26 percent changed carriers, 25 percent introduced a high-deductible health plan and 19 percent reduced benefits.

Joel Cantor, director of the Rutgers Center for State Health Policy, said the survey results appear to reflect trends already underway prior to the ACA, including rising premiums and increasing out-of-pocket contributions by workers as the main cost control strategy: “The proportion reporting that they may drop coverage is unsurprising, given the ongoing trends companies face. The good news seems to be that the ACA seems not to have triggered serious problems for companies. The bad news is the ACA hasn’t eased the burden of providing health coverage for companies, either.”

Cantor said the survey results suggest NJBIA members are more likely to offer health coverage than employers in general. He noted the NJBIA survey found that 85 percent of businesses under 25 workers offer health insurance. Cantor cited a 2013 federal survey that found health coverage was offered by 28 percent of businesses with fewer than 10 workers, and 62 percent of those with between 10 to 24 workers.

“I find the BIA survey very informative,” Cantor said. “Their members are deeply engaged in dealing with health benefits issue and what they choose to do with their health benefits will set the trend for the state.”

Sarah M. Adelman, vice president of the New Jersey Association of Health Plans, the trade group for the state’s insurers, said: “NJBIA’s report is the latest warning that far more needs to be done to address the rising cost of health care.”

She said cost drivers include high fees from hospitals and other health care providers that don’t participate in insurance company networks, and  the advent of enormously expensive specialty drugs. She also cited changes brought on by the ACA,  including new coverage mandates and rules for how employer coverage can be priced, as well as taxes and fees like the ACA premium tax. That is estimated to cost New Jersey premium payers about $5 billion over the next 10 years. 

“The bottom line is that the cost of premiums is a direct reflection of the underlying cost of health care, and these cost-drivers must be meaningfully addressed in order to ease the burden on consumers and employers, as well as on our state budget,” Adelman said.

Brian Corbey, Aetna’s national head of sales for small businesses, said private exchanges are one option for small employers. In a private exchange, the employer can give workers a menu of health plan choices, and the employer can also specify how much it will pay for coverage; workers can opt to pay out of pocket to get more extensive benefits.

“Private exchanges give employers the ability to offer employees an easy online shopping experience,” Corbey said. “Employers get easier benefits administration, allowing them to focus on running their businesses.”

Mike Munoz, senior vice president of sales and marketing for AmeriHealth New Jersey, said: “Small businesses have undoubtedly experienced sticker shock in the past year,” in part due to changes insurers made to health plans to comply with the ACA. 

“In an effort to help small businesses simplify the complexities of health care and give them the tools they need to effectively manage rising costs, we launched a defined contribution option last year,” he added. Munoz said defined contribution “enables employers to provide their employees with a specified amount of money annually, versus paying for a percentage of annual premiums, which helps manage costs more effectively.”

“The NJBIA Health Benefits Survey results echo what UnitedHealthcare has heard from many New Jersey employers; that they are committed to offering their employees high-quality health coverage, but are very concerned about the rising cost of health care,” said Chuck Cerniglia, vice president, UnitedHealthcare. “One of the ways we are meeting small businesses’ needs has been to develop the Garden State Network. The network offers employees access to more than 18,000 physicians and 65 hospitals in New Jersey, and saves employers an average of 10 percent on premiums compared to wider network options.”

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