The emerging Patient Protection and Affordable Care Act (ACA) still has everyone – insurance companies, medical providers, employers and consumers alike — scrambling to figure out “what’s in it for me?” and also “what will the changes in coverage cost me?”
According to Employee Benefit Research Institute, if the government taxes health benefits as it intends to do, more than half of U.S. workers would either drop employer-based coverage or shop around for a less costly plan. EBN further reports that while about 75% of employees report being presently happy with benefit levels offered through the workplace, only 38% said they would prefer to get coverage in the future in the manner they do today.
It may appear to 62% of Americans, then, to be good news that the current policy delivery system will change in 2014, regardless of right- or left-leaning political tugs and tweaks. That train has already left the station. However, the bad news is the U.S. Department of health and Human Services is still in the midst of defining the minimum requirements of the various benefit levels that must be adhered to under the Affordable Care Act. And once access and benefits are defined, there remains the question of how to fund wide-spread coverage.
This month (February), I convened a roundtable panel of Wisconsin healthcare specialists to comment. Participating was Bill Smith, Wisconsin Director of the National Federation of Independent Business (NFIB); Dr. Robert Turngren, President of Meriter Medical Group, Dr. Frank Byrne, (one of Modern Healthcare’s 50 most influential physician executives) President of St. Mary’s Hospital, Cheryl DeMars, CEO of The Alliance (an employer cooperative formed to purchase health insurance); and Zack Brandon, President of the Greater Madison Chamber of Commerce. Their consensus: While there is opportunity in the new regulation to eventually bend the cost curve of coverage down, the immediate future will hold double digit rate increases, new payroll taxes on individuals, chaos in establishing and accessing new policy channels, and the likelihood of steep fines for larger companies who choose non-compliance (which is not an option). Employers large and small can, and will, take it on the chin during the transition.
If employees seem ready to take flight, companies with more than 50 employees are about to be more tightly bound to healthcare obligations than ever, with clear and steep penalties for noncompliance. And be warned: the term “Affordable” definitely is misleading. Premium rates will continue to go up as access barriers are lowered and more coverages are mandated, especially since there was no ceiling put on rates. It was suggested that larger companies may actually break off some units into free-standing LLCs to maintain independent operations below the 50-employee threshold. Then, there is the possibility that jobs creation itself may be tightened until the full cost of employment going forward is known.
The panel’s message for 2013:
• Deny denial. Learn everything you can this year to begin compliance measures.
• Insurance rates are expected to increase by 10-30% in 2013. Starting this year, employers must report any health insurance related spending to the IRS and to employees on their W-2 form – if you skip this or forget it (first year it’s mandatory), expect an IRS audit.
• Smaller companies potentially can save $5,000-10,000 in 2013 and 50% more going forward due to the Small Business Health Care Tax Credit. However, no one at the roundtable could name a single client company taking advantage of the savings, saying the present tax credit is complex and requires that the average wage paid is $50,000 per employee — high for qualifying companies employing 25 or less workers.
• The Summary of Benefits and Coverage (SBC) statement should increase coverage transparency, helping employers make the best apples-to-apples choice of providers. The bad news: the government reporting form is still jargon-laid and legalistic, making it unlikely it will be read by more than those required to do so by the company CEO… who probably won’t read it, either, or couldn’t understand it if she or he did read it.
• The panel’s summary advice was to learn all you could this year. Tap into webinars and legal white papers. Stay where you are now, with your present premium provider if possible, to help the market in general with stability issues prior to the introduction of state and/or federal health care exchanges. Also, that’s where you’re likely to get the best deal in the interim. As with any large-scale reformation, there is chaos, but there also will be an end to it, and possibly opportunity… eventually.
So, let’s all take a collective deep breath. The sky isn’t falling, but be prepared to dodge a brick or two, and the best way to do that is to look up and be aware of what’s raining down.