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As the CEO of a large corporation, I understand the role that health care benefits play in organizational success. A business fundamental is to manage operational costs so that you can continue to provide your products and services at a price that your customers will pay, and health benefits are a significant cost which must be addressed. At the same time, health benefits are critical to our ability to attract, retain and develop top talent.

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Since the ACA’s passage nearly five years ago, employer-sponsored health benefits have been undergoing constant change and the “new normal” is not yet in clear sight. This is true for nearly every link on the health care value chain: providers, payers, health plans, consultants, and brokers. Our sister company, management consultant Oliver Wyman, recently published a report that describes the rapid and fundamental changes occurring in the health care industry, which of course will affect employers as well.

 

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While health care is still — mostly — local, there’s no denying that for most organizations there is a trend toward taking a global perspective on health. As public health systems absorb the strain of aging populations and health care cost inflation, regulators and employees will turn to the private sector for support. In addition, the value of health benefits in the drive for talent and productivity is being redefined due to new health issues and demographic shifts.

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The shift from defined benefit (DB) to defined contribution (DC) retirement plans took root years ago, with Australia, the US, the UK, and Canada leading the way in the global economy. A similar transformation is underway with health care benefits. But when you compare the retirement and health care sides, the differences are fairly sizeable.

 

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Looking back on the first year of full ACA implementation, one of the most notable events is one that didn’t happen: widespread “dumping” by employers to the public exchanges. When the law was passed in 2010, many saw it as a mortal blow to employer-sponsored health benefits, with some analysts predicting that as many as 35 million employees would lose employer health benefits. Those projections turned out to be wildly off base: The group market is alive and well, and in some ways stronger because of health care reform. In fact, a case can be made that reform will ultimately improve the quality of group insurance offerings as insurance issuers learn to compete for consumer attention in the individual market and import those lessons to the group segment.

 

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I think most HR and benefit professionals feel that offering a worthwhile benefits package is a key part of the employee value proposition. When someone joins a company, particularly one like ours, they’re going to expect competitive benefits that are built around choice and value. It’s a responsibility that large employers are not going to outsource or abdicate anytime soon.

 

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While Republicans will control both chambers in the 114th Congress that convenes in January, there’s not much they can do to seriously weaken the Affordable Care Act over the next two years without a filibuster-proof Senate majority and President Obama wielding a veto pen. The fate of the law now lies – again – across the street from the Capitol at the Supreme Court, where an expected decision in June (King v. Burwell) could strike down federal subsidies in the 36 states where the federal government runs the exchanges.

 

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On the ACA, we’re arguing about not only the expansion of Medicaid, the employer and individual mandates, and the Cadillac tax, but also the proper roles of the federal government, the states, employers, individuals, and other players in the US health care system … about US fiscal, tax, health care, economic, and social policies. And about our values, and whether the ACA reflects them, or doesn’t.

 

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As the ACA creates more standardization of medical benefits, employers who want to differentiate themselves as great places to work are sharpening their focus on workforce health — and changing their thinking on how to get there. In just the past few years, changes in the market, in technology, and in employee attitudes — combined with what we learned from past efforts — are pointing the way to a wellness program that may look very different from the standard program today.

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At first glance, there may not seem to be much connection between the expanded Medicaid program and public health insurance exchanges and employer-provided coverage, but a closer look reveals at least two important ways employers will be affected.

 

On the plus side, since payments are now being made to providers for care that used to be uncompensated or provided more on an emergency basis, the rate of medical inflation more than likely will slow down in the group market over the next several years, as compared to what it otherwise would be. At the same time, however, a flood of newly insured Americans will make access to all health care services — and particularly primary care services — more challenging, considering that the number of providers will not change much.

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The Affordable Care Act (ACA) has been both a blessing and curse to health care innovation.

 

On the plus side, it has forced employers to be more aggressive about managing their costs and improving outcomes in anticipation of the 40% excise tax on Cadillac-style health benefits slated to take effect in 2018. The issue is now more pressing than ever in this new environment where employees are expected to make smarter choices and become better health care consumers.

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See all articles in this series.

 

I’m pleased to kick-off of our 10 Days of ACA series. We asked a panel of experts from across Mercer to reflect on health care reform developments in 2014 and look ahead to what the ACA will bring in 2015.

 

It’s hard to believe we have been forging through ACA compliance for over four years. 2014 has been a roller coaster ride as we absorbed the impact of many final rules and regulations, FAQs, and court decisions addressing various aspects of ACA compliance. Here is a high-level summary of what transpired:

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