Read to Me Philadelphia
ACA-Now What?
Now that the first Affordable
Care Act (ACA) enrollment period has ended, what is the impact for employers? I
recently attended a Healthcare Businesswomen’s Association (HBA) panel
discussion on “Beyond the Basics of the Affordable Care Act.” Our speakers
included: Stephen Reid, Founder and CEO, PharmSpective; Tom Sibson, CFO, Bayada;
and Linda Taylor, Sr. VP of Sales, Independence Blue Cross.
According to the panel, we are beginning to get a better
idea of enrollment patterns and potential premiums and credits for 2015. Contrary
to initial predictions, the plan selected by most participants was the mid
level silver plans not the lowest level bronze plans. High deductible plans were popular and are here to stay. According
to Mr. Reid, the number of younger people enrolling in insurance fell far below
the 40% goal of the administration, which may not bode well for premium prices
for 2015. According to Ms. Taylor, Blue Cross has experienced an average policy
increase of 5%. As part of the ACA, the relationship between the premium for a
64 and an 18 year old has been compressed to a 3/1 ratio from a 6/1. As a
result, the premium in 2014 for businesses with younger workers rose at a
faster rate than for those with older workers. In addition, the large insurance
companies will be reporting their earnings over the next few weeks. United
Health Care kicked off the earnings season with improved first quarter revenue
but lower margins as a result of newly
effective ACA taxes, ACA provisions and sequestration negatively impacting
first quarter earnings by nearly $0.35/share. Of course, we can’t forget
about the Cadillac Tax that employers will pay if plans are overly generous and
premiums exceed prescribed levels by 2018.
So, how are businesses addressing these challenges? Ms.
Taylor spoke about the rising interest in self-insurance. While large firms
have used this option, more midsize companies are considering self -insurance,
as it is less restrictive under the ACA compliance guidelines. In order to
protect against exposure for catastrophic illness, they are using a stop loss
provision to place risk with a third party provider. Also, organizations are
considering defined contributions where they tell employees that they will
contribute $xxx.xx for benefits. Of course, this defined contribution amount
needs to meet the ACA compliance criteria or the employer will be penalized.
For large employers, the concept of defined contribution is being pared with a
private exchange. Employers are providing employees with options via a benefit
portal and it is up to the employee to select the type of coverage that works
for them. The employer isn’t really part of the decision process. Employers
make their defined contribution and deduct from the employee’s pay for the differential
to pay for the coverage that the employee has selected.
If this sounds a great deal like the change from pensions to
401K plans, you are correct. The panel agreed that we are going to continue to
see a rise in employee directed decisions. As employees take on a greater
responsibility for their health insurance premiums and out of pocket expenses,
there will be a rise in consumerism. Already, we are seeing employees discussing
the cost of medicine and procedures with physicians. In order to provide
employees with the tools to make decisions, we are seeing greater transparency.
According to Ms. Taylor, Blue Cross has information on procedure costs and
outcome results by provider and they are increasingly making this information
available to insured parties. In the not to distant future, she envisions a
marketplace like Amazon where an insured can look for services like an MRI and
select a provider based on a number of factors such as price, reviews, and
outcomes. Providing information to educate employees as you empower them to
make these benefits decisions is important as well.
For full details of the ACA impact on employers, please use
this link. https://www.ibx.com/health_care_reform/for_businesses/index.html.
If you have questions, please contact us (kris@hrcomputes.com).
Kris Kohl
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