1. February 7, 2011 SHRM Poll: Health Care Reform: Where Are Organizations in the Decision-Making Process?

2. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Health Care Reform Series: Poll 3 Introduction Landmark legislation that brought about major reforms in health care coverage in the United States was enacted in March 2010. The law affects employers and HR professionals in a variety of ways. SHRM will be conducting a series of polls on health care reform and its implications for employers and employees. This presentation covers the findings from the third poll in this series, which was conducted in December 2010. 2

3. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Key Findings Will Organizations Drop Health Care Coverage? One-half of organizations (51%) have decided not to drop health care coverage for employees as a result of the health care reform law. Of these organizations, 24% made this decision without conducting an analysis to determine whether to continue offering health care coverage or to drop coverage and pay opt-out fines. Twenty-seven percent did conduct such analysis and decided not to drop coverage. Nearly one-third of organizations (27%) are still conducting or plan to conduct an analysis on the impact of health care reform. Many Organizations Waiting on Regulatory Guidance. Nearly one-half of organizations (48%) indicated that they are waiting on regulatory guidance or information on specific provisions in the health care reform law to make some health care decisions for their organizations. What Are the Implementation Barriers? For a number of provisions in the health care law that will take effect between 2011 and 2018, 27% to 65% of organizations reported that there are no implementation barriers for their organizations. Of the organizations that reported implementation barriers, 54% reported the cost of including benefits for adult children up to age 26 (2011) as an implementation barrier. In addition, one-third (34%) of organizations reported employee out-of- pocket expenses as an implementation barrier to their organization putting into action the exclusion on purchasing over-the counter medications using flexible spending account (2011). HR Knowledge About Law’s Specifics Steadily Increasing. The percentage of HR professionals who are comfortable with their level of familiarity with the health care reform law increased from 48% in July 2010 to 62% in January 2011. 3

4. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 4 Is your organization engaging in an analysis to determine the impact of the health care reform law on your health care plan? One-half of organizations (51%) have decided not to drop health care coverage for employees as a result of the health care reform law compared with 46% in June 2010. Note: Percentages do not total 100% due to rounding. June 2010 data are from SHRM Poll: Organizations’ Response to Health Care Reform.

5. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Is your organization engaging in an analysis to determine the impact of the new health care reform law on your health care plan? Differences Based on Medical Benefit Funding Already conducted an analysis and decided not to drop health care coverage Self-insured (33%) > insured (20%) Will not conduct an analysis and already decided we will not drop health care coverageInsured (31%) > self-insured (18%) Unsure at this timeInsured (26%) > self-insured (18%) 5 Comparison by Medical Benefit Funding Organizations with self-insured plans were more likely to have already conducted analysis and decided NOT to drop health care coverage.

6. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Is your organization waiting to make any health care plan decisions based on any of the following factors? YesNoDon’t know Regulatory guidance or information on specific provisions in the health care reform law48%42%10% Changes to specific provisions in the health care reform law32%57%11% Repeal of specific provisions of the health care reform law24%64%12% Repeal of the entire health care reform law13%75%12% Other factors13%53%35% 6 Note: n = 617-674. Percentages do not total 100% due to rounding. Data sorted by “Yes” column.

7. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Is your organization waiting to make any health care plan decisions based on any of the following factors? Differences Based on Medical Benefit Funding Regulatory guidance or information on specific provisions in the health care reform law Self-insured (54%) > insured (42%) Changes to specific provisions in the health care reform law Self-insured (36%) > insured (28%) 7 Comparison by Medical Benefit Funding

8. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 For the following provisions of the health care reform law, what do you see as the main implementation barrier in your organization? There is no implementation barrier for my organization Lack of understanding of the details of the law provision Cost of implementation to the organization Employee out-of pocket cost Lack of support by employees, unions or Management Other Limits on deductibles in the small group market (companies with less than 100 employees) to $2,000 for individuals and $4,000 for families (2014) 65%8%18%3%2%4% Prohibition on lifetime dollar limits on coverage of essential benefits (2011) 52%8%32%4%1%4% Exclusion on purchasing over-the counter medications using flexible spending account (2011) 43%13%1%34%8%2% Inclusion of benefits for adult children up to age 26 (2011)37%4%54%2%1%2% Employer mandate to provide coverage or pay a penalty (2014)37%17%37%1%4% Excise tax on high-value (so-called "Cadillac") health plans (2018)34%19%28%7%8%4% Requirement to report the value of an employee's health benefits on individual employee W-2s (W-2s for 2012 tax year) 30%17%38%2%6%7% Tax form 1099 requirement for all vendor transactions above $600 (2012) 29%22%39%0%2%7% CLASS Act (government-provided long-term care insurance) (2011- 2013) 27%48%12%3% 6% 8 Note: n = 674-698. Percentages do not total 100% due to rounding. Data sorted by first column.

9. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 What is your level of agreement with the following statement: "I am comfortable with what I know about the new health care reform law." 9 The percentage of HR professionals who are comfortable with their level of knowledge about the health care reform law increased from 48% in July 2010 to 62% in December 2010. This shows that more HR professionals are quickly familiarizing themselves with the health care reform law, thereby helping their organizations with the implementation of the law. Note: July 2010 data are from SHRM Poll: Organizations’ Response to Health Care Reform—Challenges and Actions.

10. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 What is your level of agreement with the following statement: " I am comfortable with my level of knowledge about the CLASS Act provision (government-run long-term care insurance) in the health care reform law. " 10 Note: n = 678 Only 14% of HR professionals are comfortable with what they know about the CLASS Act provision. Nearly half of organizations (48%) indicated that lack of understanding of the details of the CLASS Act provision as an implementation barrier to their organizations.

11. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 11 What resources is your organization currently using in regard to the health care reform law? Note: Percentages do not total 100% as multiple responses were allowed. Respondents were allowed to select their top two options. July 2010 data are from SHRM Poll: Organizations’ Response to Health Care Reform—Challenges and Actions.

12. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 What resources is your organization currently using in regard to the health care reform law? Insurance broker (by staff size): Smaller organizations (those with fewer than 2,500 employees) were more likely than organizations with 2,500 to 24,999 employees to report that they are currently using insurance brokers as one of their resources in regard to the new law. SHRM’s resources on the health care reform law (by staff size): Smaller organizations were more likely than organizations with 2,500 to 24,999 employees to report that they are currently using SHRM’s information as one of their resources in regard to the new law. Legal counsel (internal or external) (by staff size): Larger organizations (those with 500 or more employees) were more likely than smaller organizations (100 to 499 employees) to report that they are currently using legal counsel as one of their resources in regard to the new law. 12 Comparison by Organization Staff Size Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 50 to 99 employees (84%) 100 to 499 employees (83%) 500 to 2,499 employees (74%) 2,500 to 24,999 employees (55%) Smaller organizations > larger organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (38%)500 to 2,499 employees (54%) 2,500 to 24,999 employees (68%) 25,000 or more employees (68%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 50 to 99 employees (62%) 100 to 499 employees (56%) 500 to 2,499 employees (52%) 2,500 to 24,999 employees (36%) Smaller organizations > larger organizations

13. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 What resources is your organization currently using in regard to the health care reform law? Consultants (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than organizations with 100 to 2,499 employees to report that they are currently using consultants as one of their resources in regard to the new law. Internal experts (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than smaller organizations (100 to 2,499 employees) to report that they are currently using internal experts as one of their resources in regard to the new law. 13 Comparison by Organization Staff Size (continued) Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (34%) 500 to 2,499 employees (42%) 2,500 to 24,999 employees (67%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (23%) 500 to 2,499 employees (27%) 2,500 to 24,999 employees (44%) Larger organizations > smaller organizations

14. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 What resources is your organization currently using in regard to the health care reform law? Differences Based on Organization Sector Differences Based on Organization’s Operations Location Differences Based on Medical Benefit Funding Differences Based on Union Status Insurance broker Privately owned for-profits (80%) & nonprofits (74%) > publicly owned for-profits (53%) & government (47%) U.S.-based only organizations (72%) > multinational operations (58%) Insured (81%) > self- insured (59%) Non-unionized (72%) > Unionized (55%) SHRM’s resources on the new health care reform law Nonprofits (53%) > publicly owned for-profits (36%) U.S.-based only organizations (52%) > multinational operations (37%) Insured (56%) > self- insured (41%) Non-unionized (50%) > Unionized (40%) Legal counsel (internal or external) Publicly owned for-profits (61%) > privately owned for-profits (45%) Multinational operations (57%) > U.S.-based only organizations (47%) Self-insured (60%) > insured (37%) Consultants Publicly owned for-profits (60%) > privately owned for-profits (33%) Multinational operations (54%) > U.S.-based only organizations (41%) Self-insured (56%) > insured (30%) Unionized (55%) > non-unionized (42%) Internal experts Multinational operations (38%) > U.S.-based only organizations (27%) Self-insured (34%) > insured (23%) 14 Comparison by Selected Organizational Demographics Note: Blank cell indicates that there were no significant differences in this category.

15. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 15 If you use an insurance broker or third-party administrator to help you understand the health care reform law, we would like to understand the primary direction of contacts made between you and the agent. Please select the option below that best characterizes how this process has worked for your organization: Note: n = 619

16. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 The broker or third-party administrator contacts us about as frequently as we contact them (by staff size): Smaller organizations (those with 500 to 2,499 employees) were more likely than organizations with 2,500 to 24,999 employees to report that the broker or third- party administrator and the organization have reached out to each other about equal number of times. We have not used an insurance broker or third-party administrator help us understand the health care reform law (by sector): Publicly owned for-profits (27%) were more likely than privately owned for-profits (7%) to report that their organizations have not used an insurance broker or third-party administrator to help them understand the health care reform law. 16 Comparison by Organization’s Staff Size, Sector and Medical Benefit Funding Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 500 to 2,499 employees (49%)2,500 to 24,999 employees (29%) Smaller organizations > larger organizations Differences Based on Medical Benefit Funding We have not used an insurance broker or third-party administrator to help us understand the health care reform law Self-insured (18%) > insured (9%) The broker or third-party administrator contacts us about as frequently as we contact themSelf-insured (39%) > insured (31%) The broker or third-party administrator contacts us; we do reach out to them on occasion, but somewhat less frequently than they do. Insured (22%) > self-insured (13%) If you use an insurance broker or third-party administrator to help you understand the health care reform law, we would like to understand the primary direction of contacts made between you and the agent. Please select the option below that best characterizes how this process has worked for your organization:

17. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 How is your organization’s primary medical benefit currently funded? 17 Note: n = 660

18. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 How is your organization’s primary medical benefit currently funded? By staff size: Larger organizations (those with 500 or more employees) were more likely than organizations with fewer than 500 employees to report that their organization’s primary medical benefit is self-insured. By operations location: Organizations with multinational operations (69%) were more likely than U.S.-based (52%) organizations to report that their organization’s primary medical benefit is self-insured. By sector: Publicly owned for-profits (70%) were more likely than privately owned for-profits (52%) and nonprofits (49%) to report that their organization’s primary medical benefit is self-insured. 18 Comparison by Organization’s Staff Size, Operations Location, Sector Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (36%)500 to 2,499 employees (66%) 2,500 to 24,999 employees (82%) 25,000 or more employees (86%) Larger organizations > smaller organizations

19. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Demographics: Organization Industry Industry Manufacturing—other17% Health care, social assistance (e.g., nursing homes, EAP providers)14% Government/public administration—federal, state/local, tribal8% Services—professional, scientific, technical, legal, engineering8% Financial services (e.g., banking)6% Educational services/education6% Retail/wholesale trade4% Construction, mining, oil and gas4% Other services (e.g., nonprofit, church/religious organizations)4% 19 Note: n = 652

20. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Demographics: Organization Industry (continued) Industry Transportation, warehousing (e.g., distribution)4% Insurance3% High-tech3% Utilities3% Manufacturing—auto/auto-related3% Services—accommodation, food and drinking places2% Telecommunications2% Arts, entertainment, recreation2% Real estate, rental, leasing2% Consulting1% Biotech1% Publishing, broadcasting, other media1% Association—professional/trade1% Pharmaceutical0% Other1% 20 Note: n = 652

21. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Demographics: Organization Sector 21 Note: n = 651

22. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Demographics: Organization Staff Size 22 Note: n = 580. Percentages do not total 100% due to rounding.

23. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 Demographics: Other 23 Note: n = 665 U.S.-based operations72% Multinational operations28% Single-unit company: A company in which the location and the company are one and the same. 30% Multi-unit company: A company that has more than one location. 70% Multi-unit headquarters determines HR policies and practices 56% Each work location determines HR policies and practices 3% A combination of both the work location and the multi-unit headquarters determine HR policies and practices 41% Is your organization a single-unit company or a multi-unit company? Are HR policies and practices determined by the multi-unit corporate headquarters, by each work location or both? Does organization have U.S.-based operations (business units) only or does it operate multinationally? Note: n = 657 Note: n = 480 20% of organizations indicated that employees at their work location were unionized. Note: n = 650

24. Health Care Reform - Where Are Organizations in the Decision-Making Process | ©SHRM 2011 SHRM Poll: Health Care Reform – Poll 3 Response rate = 13% Sample comprises 698 randomly selected HR professionals with the job title of manager and above, as well as HR professionals in the compensation and benefits functional area. All analyses were based on respondents working at organizations with a staff size of 50 employees or more. Margin of error is +/- 4% Survey fielded December 3 – December 31, 2010 24 Methodology For more poll findings, visit: www.shrm.org/surveys www.shrm.org/surveys Follow us on Twitter: http://twitter.com/SHRM_Research http://twitter.com/SHRM_Research