Is Health Reform over Post-Election?

Simply put, no, we haven’t heard the last of health care reform. We can expect a lot more from Obamacare as the implementation phase begins in the President’s second term. While I’m sure I’m not alone in hoping this all works out for the best, I’m also not alone in concern over costs of implementation to business owners. ~ Eric

Health costs for mid-size companies will rise due to PPACA


According to a new study by the Urban Institute, small and large businesses could benefit from health reform, but mid-size companies will see a jump in health care costs.

Medium-sized businesses—firms that have between 101 and 1,000 employees—would have seen a 9.5 percent jump in their total health care costs if the Patient Protection and Affordable Care Act had been fully in place this year, the study found.

The report, prepared by Urban’s Health Policy Center, was based on a simulation of the impact the law would have had on businesses in 2012, had it been fully in effect.

Researchers say small businesses would have seen their costs fall by 1.4 percent. Firms with more than 1,000 workers would have seen a 4.3 percent increase.

Higher costs stem largely from expanded coverage, the report says.

But, researchers note, the study estimates don’t include the potential effects of cost containment initiatives in the PPACA or strategies available to employers to reduce their costs by modifying their contributions or benefits.

And despite fears that that health reform will cause employers to drop employer-sponsored coverage, the report says that it will actually do the opposite, increasing the number of Americans covered by employer-sponsored insurance by 2.7 percent. Overall, the Urban Institute claims, about 4 million more employees would have had health care coverage if the PPACA had been in place this year.

Previous reports have varied on their conclusions about what health reform will do to employer-sponsored coverage. An Employee Benefits Research Institute report released a couple weeks out found that employer-sponsored health coverage continues to decline.

The Urban Institute is a nonprofit, nonpartisan policy research.

More Health-Law Changes Coming in 2013

(Wall Street Journal)

Health-care reform is here to stay—for the foreseeable future. So for the millions of Americans with health insurance at their workplaces, this fall’s “open enrollment” period will be one of the most important in years.

Next year will see some of the many significant changes brought on by the Affordable Care Act, including easy-to-read plan summaries and caps on flexible spending accounts. The ability of health insurers to place limits on annual spending is also on its way out, while earlier reforms such as adding adult children to their parents’ plans offer new options to consumers.

Most of the really big changes—including health-insurance exchanges and tax credits to help people buy coverage—aren’t coming into play until 2014. Still, the provisions going into effect in 2013, along with those that have already been introduced, can affect any changes you might want to make to your health coverage.

And the presidential election is unlikely to change the landscape for people picking health plans this fall. If President Obama is re-elected, the changes stay. If GOP candidate Mitt Romney wins, getting rid of the law is unlikely to be a quick or easy process, given that the Democrats are expected to retain control of the Senate.

“This year’s fall enrollment season is really the calm before the storm of health-plan reforms that will come in 2014,” says Tom Richards, insurer Cigna’s president in charge of reform implementation. “There is some uncertainty among employers because of the political dynamics they are watching, nevertheless they continue to move ahead to implement the changes that were part of reform.”

Here are five things you need to know as you sift through your plan options over the next few weeks.

1. Higher Premiums

First, the bad news: You will likely be paying higher premiums next year, with 13% of companies planning to raise their employees’ contributions to health-care costs by five percentage points or more, and 42% planning premium increases of one to five percentage points, according to a July survey of employers by benefits consultant Towers Watson TW -2.22% .

Some good news: The pace of that growth is slowing. Employer health-care costs are expected to rise by 5.3% in 2013, compared with 5.9% this year, according to the survey.

2. Straightforward Summaries

The most visible change in your packet of insurance options for 2013 is a new form called a “Summary of Benefits and Coverage.”

The health-care law requires plans to provide these as of last month. The summary is meant to be a simple, easy-to-read description of how a plan works, what it covers and doesn’t cover—there is no fine print allowed. Every health plan must have one, allowing you to compare two different plans side by side.

3. FSA Limits

For 2013, the amount you can put into a workplace flexible spending account will be capped at $2,500. Previously, the limits, if any, were set by the employer.

4. Dependent Coverage

Dependent coverage has gotten a boost from the health-law provision, which took effect in 2010, allowing many adult children up to age 26 to remain on their parents’ policies, says Karen Pollitz, senior fellow at the Kaiser Family Foundation, a health-policy nonprofit organization.

5. Higher Spending Cap

If you suffer from a chronic or costly medical condition, it may come as some relief that annual limits on how much an insurer will pay for care will be going up next year—and on their way out—for many plans. For 2013, the cap rises to $2 million, from $1.25 million this year. The cap goes away entirely in 2014.

Health reform a big concern for business


Health care costs and the economy are the top factors affecting both employers’ business decisions and their vote in the upcoming presidential election, according to a survey released today by the Principal Financial Group.

More than half of employers (57 percent) say health care costs are top of mind in regards to their business decisions, while slightly less (54 percent) cite economic growth. Other top issues include uncertainty of taxes (45 percent), gas prices (43 percent), unemployment (37 percent) and inflation (36 percent). The Principal group surveyed 604 business owners in companies of 10-500 employees.

American business owners say both the economy and health care reform will impact their votes in the presidential election, but the economics matter slightly more.

President Obama’s Patient Protection and Affordable Care Act has been controversial, while many reports have attempted to understand the impact it will have on employers, all to different results. Challenger Mitt Romney has said he will repeal and replace the health reform law. Both candidates have very different views on how to best handle the struggling economy.

[Also see “Reform isn’t impacting employer-sponsored coverage”]

The main trouble with health reform is the looming uncertainty around it, employers say. In addition to worrying about managing the cost and administrative responsibilities of health care, employers say understanding the impact of health care reform on their business is their top concern for their well-being in the upcoming year.

Though the economy is a concern, businesses say they are doing fine, mainly because they are being frugal in their strategies.

Roughly half of those surveyed say their business financials improved compared to a year ago and more than half (58 percent) believe their financials will improve in the next 12 months. But when it comes to the broader picture, nearly half of those surveyed (46 percent) are cautious about the economic outlook for 2013, and two-thirds are holding off on making long-term financial commitments because of the current state of the economy.

“While owners of small to medium-sized businesses report growing confidence in what they can control—their own companies—they do so with a healthy dose of caution in the context of the overall economy,” says Amy Friedrich, Principal vice president. “As these owners prepare for Election Day, the economy will not only influence their vote, but also their long-term plans for spending.”

In an attempt to take control of the future of health care while curbing costs, more employers are turning to wellness programs. Nearly two-thirds of those surveyed (64 percent) offer some form of wellness benefit to their employees. Among those that do, almost one-third (32 percent) have experienced lower health insurance costs. They also say the programs have made their employees more productive at work, increased employee retention and caused them to be away less from work.

“With lingering ambiguity around health care reform, the challenge of managing health care costs can be overwhelming for owners of small and mid-sized businesses,” Friedrich says. “Business owners are seizing opportunities to take action amidst this uncertainty and experiencing positive results.”

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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