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Obamacare already driving decisions for employers

Oct. 1, 2013
Key provisions of the Patient Protection and Affordable Care Act or ACA – a.k.a. “Obamacare”— kick in today, even as a fierce faction in the House of Representatives continues to battle the rest of Congress and the President to roll back or at least rewrite parts of the landmark legislation. While implementation of ACA’s employer mandate has been pushed back until 2015, the focus right now is on individuals-- and by extension for those employed,  their employers.

Key provisions of the Patient Protection and Affordable Care Act or ACA – a.k.a. “Obamacare”— kick in today, even as a fierce faction in the House of Representatives continues to battle the rest of Congress and the President to roll back or at least rewrite parts of the landmark legislation.

While implementation of ACA’s employer mandate has been pushed back until 2015, the focus right now is on individuals-- and by extension for those employed,  their employers.

That’s because October 1st is the first day individuals may purchase insurance by enrolling in one of the new government-run “Health-Insurance Exchange” (HIX).

According to the Henry J. Kaiser family Foundation, individuals who don't have health insurance from an employer and must buy it on their own will be able to do so via the public health- insurance marketplace or HIX.

These exchanges are either operated by individual states or, in those instances where a state has opted out of running an exchange, by the federal government. In addition, individuals—based on their income- individuals may be eligible for federal reimbursement to help offset the costs of buying the insurance.

There are news reports of employers that have offered employees very limited benefits plans and are now phasing out those plans— thus aiming to lower their costs by driving their employees to the ACA exchanges.  Other employers are providing workers with a fixed sum and letting them choose a plan from a privately run (non-ACA) healthcare exchange.

Still others are taking a more moderate course, such as announcing they will drop or limit spousal coverage on the health-insurance plans they offer employees.  

To be clear, ACA only requires employers to offer a minimum level of insurance. However, employers that provided only a bare-bones and high-deductible plan have had to increase their own offerings to meet the law's requirements.

“Double-digit premium increases might encourage small-and mid-sized employers to curtail insurance benefits altogether even after paying the penalty per the ACA,” pointed out Paul Keckley, executive director of the Deloitte Center for Health Solutions, in his 2013 “Health Care Reform Memo.”

He noted that between 2000 and 2010, 10% of employers— mostly smaller and mid-sized firms-- dropped healthcare coverage altogether. Deloitte’s 2012 Survey of U.S. Employers concluded that another 9% might discontinue coverage over the rest of this decade due to the high cost of providing it.

“For larger employers,” continued Keckley, “their calculated journey from defined benefits to defined contribution plans— so employees have more skin in the game— is expected to accelerate as they keep an eye on the success of the HIXs as a long-term alternative channel for coverage.”

And a just-released study by the University of Michigan’s  Center for Healthcare Research & Transformation (CHRT) found that the drop-off in employee-sponsored insurance (ESI) has actually been going on for some time— for over ten years.

The study revealed that from 1999 to 2011, the proportion of individuals covered by ESI decreased by approximately 15% nationwide. CHRT attributed the primary reason for the decline in private insurance to “the erosion of ESI [plans], the most common way that Americans get private coverage.”

Yet management-consultant firm Oliver Wyman said results of its recent survey on employer-sponsored healthcare of over 1,300 firms showed that Only 8% of employers said they planned to discontinue coverage, and 42% said they planned to maintain the status quo.”

However, two-thirds of the respondents also stated that “healthcare costs were unsustainable at current rates of medical inflation— and more than half would find them unsustainable even if medical trend fell by five percentage points.”

As for reaction to what Oliver Wyman calls “the two alternative models that are gaining the most traction in the marketplace: private healthcare exchanges and value-based networks,” the survey found that 20% of employers were “willing to try them even if they saved no money” and an additional 50% were interested “if they saved money.”

Aon Hewitt,  the  research arm of global risk-management firm Aon, lists these among the key issues facing individuals now choosing a healthcare plan:

  • Higher costs.Aon Hewitt's research shows that most employers plan to subsidize employees' health coverage at the same percentage rate as last year. However, as healthcare costs increase overall, the amount of money employees will need to contribute out of their paychecks is continuing to climb. In addition, almost one in five employers has increased surcharges for adult dependents with access to coverage elsewhere. “
  • More options.  “Starting in 2014, all Americans will be required to have health care coverage or risk paying a penalty. Some employees—particularly those who are not offered health coverage through their employer—may wish to purchase individual coverage through the new state and federal marketplaces. “
  • Different plan type. “Consumer-driven health plans (CDHPs) continue to rise in popularity and have surpassed HMOs (Health Maintenance Organizations) as the second most offered plans by employers. In fact, a growing number of employers are offering CDHPs as the only plan option. While just 10% of companies do so today, another 44% are considering it in the next three to five years.”
  • Eligibility rules. Employers may be making changes to rules that determine which employees   are eligible for health coverage, particularly as they evaluate requirements of the "employer mandate" provision of ACA (again, delayed until 2015). 

"Employees typically spend very little time choosing their health benefits each year," pointed out Craig Rosenberg, Aon Hewitt's health & welfare benefits administration practice leader. "This year, that [waiting] can be a risky—and potentially costly—strategy.

“In some cases,” he continued, “not making an active decision during enrollment means employees could get defaulted into a healthcare plan that doesn't meet their needs—or even worse—leaves them and their families with no coverage at all. “It's up to employees to read the fine print and take an active role in understanding if and how these changes may impact them."

It may indeed ultimately be up to the employee to ensure he or she has the healthcare insurance coverage needed. But that doesn’t let employers entirely off the hook.

Especially those in trucking already beset with finding and keeping enough qualified truck drivers.

For a fleet to opt to no longer provide healthcare insurance or to only offer the bare minimum is more likely to drive truckers not to an HIX, but to the fleet down the road that does present employees with  a comprehensive and affordable ESI plan.

As to FleetOwner’s  query on the near-term impact of Obamacare on trucking employers,  American Trucking Assns. (ATA) spokesperson Sean McNally replied that ATA has “not  surveyed our members about the ACA and I don’t think we have any plans to do so.”

And responding to the same question posed to the Owner Operator Independent Drivers Assn. (OOIDA), spokepserson Norita Taylor told FleetOwner that it's "Hard to say what employers will do-- we don't know either."
 

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