What the Elections Will Mean for Health Care

Holding back on healthcare decisions until after November’s election? You’re not alone. CFO.com highlighted some of the changes that could possibly take place based on election results – including those in Congress – come January. Here are some highlights.

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A Democrat-led Senate would make it difficult to dismantle the ACA legislatively. If Romney wins but Dems control the Senate, he could push out regulations so slowly that the law is rendered virtually ineffective. He also could bring to a crawl the government’s development of health exchanges for states that choose not to create their own.

If Romney wins and the GOP controls the Senate, congressional Republicans could attach a repeal of the (individual) mandate to a budget bill and push it through with as few as 50 seats (with, in that case, Vice President Ryan casting the deciding vote). “That would leave the rest of the ACA in place, but its guts would be eviscerated,” says Klein.

If Obama wins, the President doesn’t need a Democrat-controlled Senate to keep the ACA in place. He can veto any legislative efforts to undo it. The status quo will reign.

What it means to your business?

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The law’s “employer shared responsibility” provisions, scheduled to take effect in 2014, include a penalty for companies that do not provide “minimum essential coverage,” to be collected via corporate tax returns. A “large” employer, generally defined in the law as having more than 50 employees, is subject to the penalty if even one full-time employee qualifies for “premium assistance tax credit” (designed to help low- and middle-income individuals and families purchase health insurance). In most cases, the penalty will be $2,000 per year per full-time employee.

The Internal Revenue Service tried to assuage some concerns over shared responsibility earlier this month by issuing a safe-harbor notice that should help employers figure out which workers are deemed full-time, and thereby help some to avoid the shared responsibility penalty. Along with the Health and Human Services Department and the Labor Department, the IRS also recently provided guidance about the ACA-mandated maximum 90-day waiting period between new employees’ start date and when their health benefits kick in, also to take effect in 2014. Many employers currently use a longer waiting period, often six months.

Some observers say more clarity is still needed, however. The general air of uncertainty around the ACA is provoking much discussion among companies’ executives these days, says Shawn Nowicki, director of health policy for New York Business Group on Health, an employer-based business coalition with a subsidiary that offers a health-insurance exchange. Until fairly recently, most discussions about a company response to the ACA took place at the human-resources level, but now CFOs and their key reports are getting more involved, he notes.

Given the lack of clarity on how election results might change the health-care picture, some companies are waiting to move forward with new health-care plans. “We were disappointed that the Supreme Court didn’t overturn the ACA,” says Hank Funsch, CFO at Dayton T. Brown, an engineering, testing, and technical-services firm for which the Defense Department is its largest client. “But at this point, we’re not sure what even a Romney presidency and stronger Republican Congress would be able to accomplish in reversing Obamacare or making it ineffective by holding back funding for some provisions. We’re in a wait-and-see mode at the present time.”

The company has decided, though, that it needs to obtain more professional management of health-benefit claims. And “after some experience in that arena,” it plans to solicit quotes from insurers to cap its annual financial exposure now that the ACA has banned insurers from imposing lifetime caps on coverage, Funsch says.

Others are more set on what direction to take. “I have my doubts about either side being able to effect much change due to the Senate rules that allow 41 senators to block change,” says Stanley Berman, CFO at Global Impact, a large charitable organization. “We’re planning for the law to continue being enacted largely as passed.”

About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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