Benefits Business

Are we there yet?

Perspectives vary on recently passed health care reform bill

By Len Strazewski

Someone must like fruitcake. Every holiday season, Americans send fruitcakes to each other and some no doubt are welcomed. But for many, the hodge-podge of booze, cake and dried-up fruit is just too much to manage—and the cake winds up discreetly “trashed.”

This past Christmas Eve, Americans got health care reform fruitcake, a Senate bill welcomed by some but quickly trashed by agents and brokers, employee benefits experts, liberals and conserva­tives alike.

And even those who had health care reform on their holiday wish list may find the complicated and compromised provisions difficult to accept.

Passed by the Senate around 7:00 a.m. on Christmas Eve after a last minute “Managers’ Amendment,” the Patient Protection and Affordable Care Act includes a series of provisions that will dramatically change the packaging and delivery of health insurance and make health benefits a mandatory offering for most employers.

However, the bill does not specify how the health plans will be sold, delivered or managed by the traditional insurance agency delivery system.

Exchanges

The centerpiece of the legislation is the creation of a health insurance exchange by each state that would serve as a unique marketplace for individuals and small businesses that often have trouble purchasing affordable health insurance.

Beginning in 2014, the exchanges would regulate plan standards and cost sharing as well as the enrollment process and would allow employers with 100 or fewer employees. Eventually, larger employers would be allowed to buy coverage through the exchanges.

The bill calls for the exchanges to offer four coverage packages that would vary by actuarial value and a catastrophic plan exclusively for young adults, according to an analysis by Sibson Consulting, a division of the Segal Company in New York.

The legislation also requires the exchanges to offer at least two multistate plans with the scope of coverage based on the present coverage provided by the Federal Employees Health Benefits Program and approved by the federal Office of Personnel Management.

Impact on employers

Sibson notes that employers with 50 or more full-time employees—a target market for many independent agents and brokers—would be required to provide a minimum standard of health benefits or pay a fine for every month when at least one employee is not covered and is eligible for a federal subsidy for individual coverage.

Employers with 200 or more employees would be required to automatically enroll employees into their plan. Small businesses would receive tax credits of up to 35% of premium.

Almost immediately after becoming law, the legislation would eliminate pre-existing condition restrictions and dollar limits and mandate preventive care and wellness programs, to be defined later.

The bill also includes a mix of changes to Medicare and Medicaid as well as millions of dollars in subsidies to specific states and restrictions of availability of abortion procedure funding.

For employers, the legislation would upset that stability of employer-based health benefits, says the American Benefits Council (ABC), a Washington-based lobbying group.

“Sound health care reform legislation must pro­tect the viability of—and indeed strengthen—the employer-based health care coverage system that serves the vast majority of Americans,” noted ABC President James A. Klein. “Regrettably, taken as a whole, the Senate bill still does not meet the test.”

Klein says the bill imposes “unrealistic new requirements or financial commitments.” Specifically, Klein cites an excise tax on high-cost employer plans and an annual tax on insurers and self-insurers that has been designed to offset some of the costs of reforms.

Contrived consensus

For some, the actual provisions are less of a concern than the politics that spawned them. Rusty Magner, executive vice president and employee benefits specialist at Meeker-Magner Co. in Des Plaines, Illinois, says, “What’s scary to me, and many clients I’ve talked with, is the way it is being done.”

Magner says many of the compro­mise positions were done to essentially buy votes from senators who had with­held support for the bill. “Ben Nelson of Nebraska and Mary Landrieu of Louisiana are the smart senators who held their votes until they got hundreds of millions of dollars for their states. Unfortunately Senators Durbin and Burris (of Illinois) were on board from the beginning, so I haven’t seen any extra dollars coming home for us.”

Magner also denounced the speed of the deals introduced immediately before the vote. “Changes and amendments are happening quickly, yet legislators only had a day to read and understand hundreds of pages of a bill—with little time for debate. They are admitting that they don’t know everything they were voting for.”

In an e-mail to his clients, Magner says that they can probably expect lower reimbursement payments to doctors and hospitals, higher premiums for individuals and employers who already have health insurance, and Medicare cuts for seniors.

He urged clients to write legislators and ask them to support limits on excessive and frivolous lawsuits that drive up medical costs, eliminate laws that prevent insurers from selling across state lines, and support stronger wellness incentives.

A little-analyzed provision designed to accommodate conservatives who oppose funding for abortions also creates burdens and complications for individuals and the insurance industry.

Meg White, senior writer at Buzzflash.com, a liberal political news Web site, says the provision creates a system by which individuals who want to purchase a health plan that would pay for pregnancy termination would have to pay their premiums twice into two separate funds.

“One check would go to pay the premium itself and another smaller amount would go to a separate premium account within the plan that would be used to pay abortion claims,” she says. “The Senate bill also allows any state in the Union to outlaw abortion coverage outright. So those of us who get to write those separate checks could end up being few and far between.”

One of the biggest concerns about the bill remains its cost. Priced at $871 billion, the Senate bill is more fiscally conservative than an earlier House of Representatives bill that was priced at more than $1 trillion.

However, budget analysis agencies such as the Concord Coalition in Washington D.C., say that the costs may not be successfully offset by long-term cost reductions and the taxes built into legislation—leading to an even larger federal deficit—even though the legislators promise otherwise.

The Concord Coalition, a non-partisan group, says the fiscal outlook for both the Senate and the House bill remain “on an unsustainable track, even with the modest deficit reduction achieved under either plan. There are clear risks that some of the methods used to achieve deficit reduction on the official scores may not hold up over the long-term.”

It’s difficult to find any organiza­tion that truly likes this bill. Even Families USA in Washington, which has supported health care reform for more than 10 years, offers only a lukewarm endorsement for the provisions that are expected to reduce the number of uninsured—and request greater subsidies for individuals and families who cannot afford the coverage the bill makes available.