1. September 17, 2010 SHRM Poll: Organizations’ Response to Health Care Reform—Challenges and Actions

2. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Health Care Reform Series: Poll 2 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 second poll in this series, which was conducted in July 2010. 2

3. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Key Findings How well do organizations understand the specific aspects of the health care reform law? 50% of organizations have taken some type of action in response to the passing of the health care reform bill. Due to a lack of clarity on the specifics of the law, another 50% have not taken action or are unsure if action has been taken. Sixty-four percent of HR professionals are having difficulty understanding the gray areas and details of the law, 52% are not comfortable with what they know about the law and 54% see lack of understanding as the main implementation barrier. Clearly, HR professionals are waiting on additional information to make informed decisions. Where are organizations turning to learn about the health care reform law? Nearly 75% of organizations report using an insurance broker to inform them on the new law. Organizations that have not yet taken action are likely relying on information from their insurance broker on how to proceed. What are the implementation barriers of the health care reform law? Lack of overall understanding of the details of the law, implementation costs and employee out-of-pocket costs were reported as the main barriers to implementing the new law. What actions are organizations taking in response to the new health care reform law? The top five actions are: 1) working with legal and/or benefits counsel to understand the implications of the law for the organization, 2) sending HR staff to training to learn the details of the law, 3) partnering with current health care benefits providers to design the 2011 health care plan, 4) developing health care cost analysis for organizational leadership, and 5) analyzing the short-term financial impact of the law and the feasibility of offering health care. 3

4. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 4 Since April 1, 2010, has your organization taken any action in response to the passing the new health care reform law? Note: n = 1095 39% of respondents report having taken no action, and these findings are consistent with the data in the next three slides. Specifically, 64% of HR professionals are having difficulty understanding the gray areas and details of the law (see Slide 6); 52% are not comfortable with what they know about the law (see Slide 8); and 54% see lack of understanding as the main implementation barrier (see Slide 9). Clearly, HR professionals are waiting on additional information to make informed decisions. Respondents who report having taken no action and those who are not sure if action has been taken are likely relying on their insurance broker to take action, as nearly three-quarters of HR professionals report using an insurance broker to inform them on the new law (see Slide 10).

5. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Since April 1, 2010, has your organization taken any action in response to the passing of the new health care reform law? Publicly owned for-profits (62%) were more likely than privately owned for-profits (47%) to report that they have taken action in response to the passing of the new health care reform law. Organizations whose primary medical benefit is currently self -insured (61%) were more likely than organizations with insured (44%) primary medical benefit to report that they have taken action in response to the passing of the new health care reform law. 5 Comparison by Organization’s Sector and Medical Benefit Funding

6. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 6 In your opinion as an HR professional, what would you say is the biggest problem for HR caused by the new health care reform law? Note: n = 774. 64% of HR professionals are having difficulty understanding the gray areas and details of the law.

7. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 In your opinion as an HR professional, what would you say is the biggest problem for HR caused by the new health care reform law? The grey areas of the new health care reform law (by medical benefit funding): Self-insured organizations (37%) were more likely than insured organizations (28%) to report the grey areas of the new health care reform law as a problem for HR. Understanding the details of the new law (by medical benefit funding): Insured organizations (36%) were more likely than self-insured organizations (28%) to report understanding the details of the new health care reform law as a problem for HR. Determining impact on future total compensation strategy (by operations location): Organizations with multinational operations (15%) were more likely than U.S.-based (10%) organizations to report determining impact on future total compensation strategy as a problem for HR. 7 Comparison by Organization’s Operations Location and Medical Benefit Funding

8. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What is your level of agreement with the following statement: "I am comfortable with what I know about the new health care reform law." 8 Note: n = 774 52% of HR professionals are not comfortable with what they know about the law.

9. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 9 In general, what do you think is the main implementation barrier of the new health care reform law for your organization? Note: n = 759. Percentages do not total 100% as multiple responses were allowed. Respondents were allowed to select their top two options.

10. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 10 What are the resources your organization is currently using in regard to the new health care reform law? Note: n = 759. Percentages do not total 100% as multiple responses were allowed. Respondents were allowed to select their top two options.

11. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What are the resources your organization is currently using in regard to the new 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 broker as one of their resources in regard to the new law. SHRM’s resources on the new 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 resources 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 to499 employees) to report that they are currently using legal counsel as one of their resources in regard to the new law. 11 Comparison by Organization Staff Size Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 50 to 99 employees (97%) 100 to 499 employees (85%) 500 to 2,499 employees (75%) 2,500 to 24,999 employees (55%) Smaller organizations > larger organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (68%)2,500 to 24,999 employees (40%) Smaller organizations > larger organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (28%)500 to 2,499 employees (49%) 2,500 to 24,999 employees (57%) 25,000 or more employees (57%) Larger organizations > smaller organizations

12. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What are the resources your organization is currently using in regard to the new health care reform law? Consultants (by staff size): Larger organizations (those with 500 to 24,999 employees) were more likely than organizations with 100 to 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 (500 to 2,499 employees) to report that they are currently using internal experts as one of their resources in regard to the new law. 12 Comparison by Organization Staff Size (continued) Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (18%)500 to 2,499 employees (34%) 2,500 to 24,999 employees (57%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 500 to 2,499 employees (18%)2,500 to 24,999 employees (32%) Larger organizations > smaller organizations

13. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What are the resources your organization is currently using in regard to the new 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 (81%) > publicly owned for-profits (60%) & government (59%) U.S.-based only organizations (76%) > multinational operations (66%) Insured (83%) > self- insured (66%) Non-unionized (75%) > Unionized (65%) SHRM’s resources on the new health care reform law Privately owned for-profits (59%) & government (66%) > publicly owned for-profits (43%) U.S.-based only organizations (56%) > multinational operations (43%) Insured (59%) > self- insured (51%) Legal counsel (internal or external) Publicly owned for-profits (56%) > privately owned for-profits (37%) Multinational operations (50%) > U.S.-based only organizations (39%) Self-insured (52%) > insured (29%) Unionized (51%) > non-unionized (40%) Consultants Publicly owned for-profits (44%) > privately owned for-profits (25%) & nonprofits (27%) Multinational operations (42%) > U.S.-based only organizations (27%) Self-insured (43%) > insured (15%) Unionized (41%) > non-unionized (28%) Internal experts Publicly owned for-profits (28%) > privately owned for-profits (15%) Multinational operations (22%) > U.S.-based only organizations (16%) Self-insured (20%) > insured (14%) 13 Comparison by Selected Organizational Demographics Note: Blank cell indicates that there were no significant differences in this category.

14. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What actions has your organization taken in response to the passage of the new health care reform bill? Already Doing/Done Planning to Do Currently NOT Doing and Have NO Plans to Do Working with legal and/or benefits counsel to help the organization understand the implications of the new law 80%15%5% Sending HR staff in organization to classes (i.e., attending seminars, participating in webcasts on this topic) to learn details of the new law and its impact on organization 78%14%8% Partnering with current health benefits provider to design 2011 health care plan that will include areas affected by the new law 75%24%1% Developing health care cost analysis for organization’s leaders59%35%7% Analyzing short-term financial impact of the new law and the feasibility of offering health care 57%33%10% Developing a new health care strategy plan for our organization48%39%13% Developing an employee communication strategy related to the new law45%46%9% Developing employee communication on the impact of the new law on the organization’s health care plan and the employees 41%54%6% Analyzing long-term financial impact of the new law and the feasibility of offering health care 38%54%9% Communicating impact of the new law to employees37%57%7% Communicating impact of the new law to retirees12%40%48% 14 Note: n = 395-427. Percentages do not total 100% due to rounding. Only respondents whose organizations have taken action(s) in response to the passing of the new health care reform law were included in this analysis. “Not sure/not applicable” responses were excluded from this analysis. HR professionals appear to be focused first on understanding the law and its implications for the organization and employees before communicating with employees/retirees.

15. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What actions has your organization taken in response to the passing of the new health care reform law since April 1, 2010? Partnering with current health benefits provider to design 2011 health care plan that will include areas affected by the new health care reform law (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than organizations with fewer than 500 employees to report that they are partnering with their current health benefits provider to design 2011 health care plan that will include areas affected by the new law. Developing health care cost analysis for organization’s leaders (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than organizations with fewer than 500 employees to report that they are developing health care cost analysis for organization’s leaders. Analyzing short-term financial impact of the new law and the feasibility of offering health care (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than smaller organizations (fewer than 2,5000 employees) to report they are currently analyzing short-term financial impact of the new law and the feasibility of offering health care. 15 Comparison of Actions Organizations Have Taken by Organization Staff Size Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (58%)2,500 to 24,999 employees (84%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (42%)2,500 to 24,999 employees (76%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (37%) 500 to 2,499 employees (59%) 2,500 to 24,999 employees (80%) Larger organizations > smaller organizations

16. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What actions has your organization taken in response to the passing of the new health care reform law since April 1, 2010? Developing a new health care strategy plan for our organization (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than organizations with fewer than 500 employees to report that they are developing a new health care strategy plan for their organization. Developing an employee communication strategy related to the new law (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than organizations with fewer than 2,500 employees to report that they are developing an employee communication strategy related to the new law. Developing employee communication on the impact of the new law on organization’s health care plan and the employees (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than smaller organizations (500 to 2,499 employees) to report they are currently developing employee communication on the impact of the new law on organization’s health care plan and the employees. 16 Comparison of Actions Organizations Have Taken by Organization Staff Size (continued) Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (35%)2,500 to 24,999 employees (62%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (36%) 500 to 2,499 employees (38%) 2,500 to 24,999 employees (61%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 500 to 2,499 employees (35%)2,500 to 24,999 employees (58%) Larger organizations > smaller organizations

17. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What actions has your organization taken in response to the passing of the new health care reform law since April 1, 2010? Analyzing long-term financial impact of the new law and feasibility of offering health care (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than smaller organizations (500 to 2,499 employees) to report they are currently analyzing long-term financial impact of the new law and their ability to offer health care. Communicating impact of the new law to employees (by staff size): Larger organizations (those with 2,500 to 24,999 employees) were more likely than smaller organizations (500 to 2,499 employees ) to indicate that they are communicating impact of the new law to employees. 17 Comparison of Actions Organizations Have Taken by Organization Staff Size (continued) Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 500 to 2,499 employees (30%)2,500 to 24,999 employees (53%) Larger organizations > smaller organizations Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 500 to 2,499 employees (32%)2,500 to 24,999 employees (61%) Larger organizations > smaller organizations

18. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What actions has your organization taken in response to the passing of the new health care reform law since April 1, 2010? Differences Based on Organization Sector Differences Based on Organization’s Operations Location Differences Based on Medical Benefit Funding Differences Based on Union Status Working with legal and/or benefits counsel to help organization understand the implications of the new law Self-insured (83%) > insured (73%) Sending HR staff in our organization to classes (i.e., attending seminars, participating in webcasts on this topic) to learn details of the new law and its impact on the organization Privately owned for- profits (86%) > publicly owned for- profits (70%) Partnering with current health benefits provider to design 2011 health care plan that will include areas affected by the new health care reform law Self-insured (81%) > insured (64%) Developing health care cost analysis for organization’s leaders Self-insured (71%) > insured (44%) Unionized (73%) > non-unionized (58%) Analyzing short-term financial impact of the new law and the feasibility of offering health care Publicly owned for- profits (73%) > privately owned for- profits (55%) Multinational operations (73%) > U.S.-based only organizations (55%) Self-insured (69%) > insured (43%) Unionized (72%) > non-unionized (57%) Developing a new health care strategy plan for our organization Self-insured (57%) > insured (34%) 18 Comparison of Actions Organizations Have Taken by Selected Organizational Demographics Note: Blank cell indicates that there were no significant differences in this category.

19. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 What actions has your organization taken in response to the passing of the new health care reform law since April 1, 2010? Differences based on organization sector Differences based on organization’s operations location Differences based on medical benefit funding Differences based on union status Developing an employee communication strategy related to the new law Self insured (51%) > insured (34%) Developing employee communication on the impact of the new law on organization’s health care plan and the employees Multinational operations (53%) > U.S. based only organizations (37%) Self insured (50%) > insured (25%) Analyzing long-term financial impact of the new law and the feasibility to offer health care Publicly owned for- profits (55%) > privately owned for- profits (35%) Self insured (45%) > insured (28%) Communicating impact of the new law to employees Multinational operations (49%) > U.S. based only organizations (32%) Self insured (41%) > insured (29%) 19 Note: Blank cell indicates that there were no significant differences in this category. Comparison of Actions Organizations Have Taken by Selected Organizational Demographics (continued)

20. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Since the enactment of the new health care reform law, has there been an increase or a decrease in contact from your organization’s plan participants (e.g., employees, spouses, retirees) with your HR/benefits staff or third-party administrator (TPA)? 20 Note: n = 291-715. Percentages do not total 100% due to rounding. “Not sure/not applicable” responses were excluded from this analysis.

21. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Since the enactment of the new health care reform law, has there been an increase or a decrease in contact from your organization’s plan participants (e.g., employees, spouses, retirees) with your HR/benefits staff or third-party administrator (TPA)? Increased contact from active employee participants (by medical benefit funding): Self-insured organizations (25%) were more likely than insured organizations (12%) to report that there has been an increase in contact with HR/benefits staff or TPA from active employee participants. Increased contact from active employee participants (by sector): Publicly owned for-profits (27%) were more likely than privately owned for-profits (14%) to report that there has been an increase in contact with HR/benefits staff or TPA from active employee participants. 21 Comparison by Organization’s Sector and Medical Benefit Funding

22. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 How is your organization’s primary medical benefit currently funded? 22 Note: n = 749

23. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 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 (71%) were more likely than U.S.-based (51%) organizations to report that their organization’s primary medical benefit is self-insured. By sector: Publicly owned for-profits (72%) were more likely than privately owned for-profits (50%) and nonprofits (49%) to report that their organization’s primary medical benefit is self-insured. By union status: Unionized organizations (64%) were more likely than non-unionized (54%) organizations to report that their organization’s primary medical benefit is self-insured. 23 Comparison by Organization’s Staff Size, Sector, Operations Location, Sector and Union Status Smaller OrganizationsLarger OrganizationsDifferences Based on Organization Staff Size 100 to 499 employees (39%)500 to 2,499 employees (69%) 2,500 to 24,999 employees (84%) 25,000 or more employees (84%) Larger organizations > smaller organizations

24. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Demographics: Organization Industry Industry Manufacturing –other 18% Health care, social assistance (e.g., hospitals, clinics) 13% Financial services (e.g., banking) 8% Services –professional, scientific, technical, legal 7% Educational services/education 6% Government/public administration—federal, state/local, tribal 5% Retail/wholesale trade 5% Construction, mining, oil and gas 4% Insurance 4% 24 Note: n = 754. Percentages do not total 100% due to rounding.

25. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Demographics: Organization Industry (continued) Industry Other services (e.g., other nonprofit, church/religious organizations)4% Transportation, warehousing (e.g., distribution)3% High-tech3% Services—accommodation, food and drinking places3% Utilities2% Real estate, rental, leasing2% Publishing, broadcasting, other media2% Manufacturing—auto/auto-related2% Arts, entertainment, recreation1% Consulting1% Telecommunications1% Association—professional/trade0% Pharmaceutical0% Biotech0% Other5% 25 Note: n = 754. Percentages do not total 100% due to rounding.

26. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Demographics: Organization Sector 26 Note: n = 756

27. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Demographics: Organization Staff Size 27 Note: n = 497. Percentages do not total 100% due to rounding.

28. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 Demographics: Other 28 Note: n = 763 U.S.-based operations75% Multinational operations25% Single-unit company: A company in which the location and the company are one and the same 29% Multi-unit company: A company that has more than one location 71% Multi-unit headquarters determines HR policies and practices 64% Each work location determines HR policies and practices 1% A combination of both the work location and the multi-unit headquarters determine HR policies and practices 35% Is 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 the organization have U.S.-based operations (business units) only or does it operate multinationally? Note: n = 750 Note: n = 556 19% of organizations indicated that employees at their work location were unionized. Note: n = 755

29. Organizations’ Response to Health Care Reform – Challenges and Actions | ©SHRM 2010 SHRM Poll: Organizations’ Response to Health Care Reform – Poll 2 Response rate = 21% Sample comprised of 1,095 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 +/- 3% Survey fielded July 22–August 3, 2010 29 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