Clean Bill Of Health? Obamacare Putting New Financial Pressure On Channel

Nearly 60 percent of respondents to a CRN poll this summer said they'd like Congress to repeal the Affordable Care Act, the federal health insurance mandate known as Obamacare.

Unlike Congress, which is biding its time while the Supreme Court considers new questions about the act's government subsidies, solution providers don't have the luxury of waiting to see what will become of Obamacare.

They've got to deal with it now, and they've got to plan for its future impacts, as well.

[Related: Could Solution Providers Push Employees To Private Exchanges?]

The Obamacare open enrollment period for the coming year runs from Nov. 15 to Feb. 15, so it's a good time to assess the impact health-care costs are having on solution providers.

In fact, health-care costs put significant additional pressure on an industry already under tremendous financial stress, and solution providers say something's got to give. One solution provider even predicted that companies could begin pushing employees to state-run health insurance exchanges rather than maintain traditional employer-sponsored programs.

On top of the industry pressure to book strong growth, solution providers are getting whacked by steadily increasing health insurance costs.

Over the past decade, the average premium for family coverage has increased 69 percent. The increases have slowed somewhat over the past five years, climbing 26 percent between 2009 and 2014 compared with 34 percent between 2004 and 2009, according to the Kaiser Family Foundation/Health Research & Educational Trust 2014 Employer Health Benefits Survey.

Solution providers who spoke to CRN for this story estimate their health insurance costs have increased about 15 percent a year over the past five years. And there's no single strategy for dealing with these increases. Solution providers are experimenting with many different strategies to try to keep costs under control.

In CRN's survey, 51 percent of respondents said Obamacare was directly responsible for increased health-care costs. Another 40 percent said the law had made no difference while about 9 percent said the law led to lower health-care costs.

At approximately $60 million a year, health-care benefits are the second-largest expense after salaries at CompuCom, a Dallas-based solution provider with 8,000 U.S. employees.

Tim Shea, CompuCom's chief administrative officer, said the company's health insurance costs have increased 15 percent every year for the past four or five years, and it was anticipating yet another double-digit annual increase for 2015.

But CompuCom decided to make significant changes to its benefits package. As of 2015, all of the company's eligible employees will be on a high-deductible plan and the company will begin using a slate of employee wellness initiatives that hit employees with a surcharge if they don't make progress toward good health.

Shea said the company expects health-care costs to decline about $5 million as a result of the new benefits strategy. Overall, the company's health-care costs are expected to increase 5 percent rather than making the double-digit jump they've made in each of the past several years.

"If we did nothing, costs would go up double-digit percentages every year," Shea said. "That's not a huge change based on Obamacare. From a cost standpoint, it's just the same trend."

Like CompuCom, solution provider Cumulus Global was facing another round of significant cost increases for 2015. Rather than get into all the nuts and bolts on its own, the Westborough, Mass.-based company signed with Insperity, which serves as a professional employer organization, allowing Cumulus Global to outsource management of the company's benefits plan.

Still, that doesn't mean Cumulus Global can just leave it to Insperity and be done with it, CEO Allen Falcon said. "We need to monitor costs carefully and manage them when we can," he said.

That's a difficult task for executives. Health-care costs don't increase in a vacuum, and they have to be considered along with the business' entire cost structure, as well as with its entire operation.

"Every year, we have to get creative with our health-care providers and the plans they offer," said Dan DiSano, CEO of AxisPoint, New York. DiSano said the situation means hiring practices are of the utmost importance.

"When you bring on a new employee, you are naturally paying higher overall compensation so you should be as sure as possible on fit before hiring key resources," he said.

"Our objective is to offer our teammates excellent health-care coverage while trying to minimize cost increases. It's not easy to achieve."

This article originally appeared as an exclusive on the CRN Tech News App for iOS and Windows 8.