Most employers in a May 2010 Towers Watson survey believe that the recently enacted health reform legislation will reduce the number of large employers offering employer-sponsored retiree health benefits, and 43 percent of employers that currently offer retiree benefits plan to reduce or eliminate them.

This trend is even more pronounced for employers likely to be subject to the excise tax on expensive plans; of that group, 55 percent are likely to eliminate or reduce retiree medical programs, Towers Watson says. Further, Towers Watson says the “Cadillac plan” excise tax will affect more than 60 percent of large employers’ active health plans by the provision’s 2018 effective date.

According to the survey, when asked how important specific health care reform goals were to their organization, 96 percent of respondents pointed to the containment of health care costs as an essential or high priority, 88 percent said encouraging healthier lifestyles and 75 percent pointed to the improvement of quality of care.

Despite these goals, nearly all employers in the survey (94 percent) believe that health care reform will raise their organization’s costs. Additionally, 61 percent believe reform will have a minimal effect on encouraging healthier lifestyles, and 73 percent believe it will have either a negative or no impact on the quality of care.

In order to cope with anticipated cost increases, 88 percent of employers plan on passing on increases to employees; 74 percent plan on reducing health benefits and programs; 33 percent plan on absorbing costs in the business; and 20 percent plan on passing on increases to customers.