Another delay in the U.S. Senate on a potential new health care law has many employers wondering what’s next.
The latest Republican-proposed health care bill – aimed to replace President Obama’s 2010 Affordable Care Act – failed to reach a vote last week and was pulled by the GOP. Senate Majority Leader Mitch McConnell, however, vowed to introduce a backup bill this week, although other Republicans appeared – at this time – ready to surrender on efforts to replace Obamacare.
On some level, employers want to see change, some tweaks in health care, said Kevin Davis, senior employee benefits consultant at Univest Insurance Inc. in Upper Saucon Township.
Under the ACA, Americans have struggled to afford health care costs, access insurance that meets their needs and see the doctor they know and like, Davis said. Premiums have risen 65 percent since 2010, and insurers are fleeing the individual marketplaces created for Americans to shop for insurance.
However, millions of people may lose their insurance if the ACA is repealed, he added.
“From an employer’s side, there is nothing in there [the Republican proposal] that is going to bring their costs down,” said Shawn Hughes, vice president of BSI Corporate Benefits LLC of Bethlehem. “Health insurance is just going to get more expensive.”
EXPANSION FOR HSA
Davis, who represents 90 employers, said the latest bill includes a provision to expand one’s ability to use a tax-deferred health savings account to pay premiums, which potentially would help individuals.
“I find that to be a pretty practical proposal,” Davis said. “The idea of expanding a health savings account to also pay premiums, that’s a new provision.
“I like that it gives more creativity to the employer. Increasing how much you put into a health savings account is a good strategy.”
OLDER PEOPLE COULD PAY MORE
Davis said he also supported lowering the baseline for pricing for the premium or monthly rate, saying that everyone potentially wins if that occurs. But under the most recent bill, there was a provision for a new form of age-banded pricing that would cause older Americans to have higher premiums, something that he didn’t support.
“The proposed five-times-age banded rate multiplier versus the current three-times-age banded rate multiplier could potentially raise the rates for older Americans, which I would not be supportive of, unless the baseline rates were reduced – which would create a win-win scenario,” Davis said.
If people do not see a reduction in base costs, then why do it, Davis said.
Hughes said that bill gave the insurance industry the ability to charge older people more for health coverage.
Davis said there should be more creative ways to fund gaps in coverage, including copays and deductibles that many people find unaffordable.
Another provision in the reform bill worth noting is an association plan that would have allowed small businesses to band together to get coverage, which they cannot do now, Davis said.
“I do believe that’s a worthwhile provision in this bill,” he said.
Malpractice tort reform is another provision in the bill that could be good for insurance purchasers, Davis said. Tort reform would allow someone to sue his doctor up to a specific amount, thereby lowering the physician’s insurance cost and, potentially, the cost for the person obtaining care from the physician.
Also, the reform bill would have removed the employer mandate to offer insurance or face fines and penalties, which created a tax filing headache for employers. The bill also called for removing the tax filing requirement for employers, Davis said.
“Those would be two things most employers would support,” he said.
Hughes said he has not heard of any company that’s been fined or penalized under the ACA for not offering insurance to employees, thought he is aware of companies that take that risk.
NATION’S HEALTH NOT ADDRESSED
The nation’s poor health is what’s causing insurance costs to rise, and employers play a role in controlling those costs, which is something this new bill did not address, according to Hughes.
“In the U.S., people are still smoking and not exercising; our life expectancy is at the first point where it’s starting to go down. … Our obesity rate, we are starting to come up to 30 percent,” Hughes said. “From an employers’ standpoint, there’s nothing in this bill that’s going to help them.”
One of the good things about the ACA is that the annual physical exam is 100 percent covered, Hughes said. Once a copay is involved, employees are less likely to go.
CULTURE OF GOOD HEALTH
Employers should be doing more to control health care costs by creating a culture that encourages good health. The ones who are doing everything they can should be rewarded with lower premiums, Hughes said.
Many employer groups are using a self-funding model and paying less for health care, as long as they engage employees and include stop-loss insurance protection.
Employers have that self-funding option today under ACA, and it essentially allows them to become the insurance provider, meaning every claim is their responsibility, Hughes said.
Another positive in the bill was the additional $45 billion in funding to battle the opioid crisis, Davis said. It’s a move that takes a look at a health care issue and shifts the debate to what insurance is covering, keeping essential benefits covered.
CADILLAC TAX DELAYED
In all proposed legislation, there are no changes to the Cadillac Tax, except to delay it, Hughes said.
“That’s a scary thing for employers,” Hughes said. “That tax was intended for those companies that offer rich benefits. The risk of their population is poor.”
This is particularly problematic for companies that have a bad risk or employees in a high-risk profession and already are past that threshold, Hughes added.
The annual premium thresholds for high-cost plans may be increased by 2020 and are at $10,200 for individual coverage and $27,500 for family coverage, Hughes said.
According to Hughes, the thresholds will be increased if the majority of covered employees are engaged in high-risk professions such as law enforcement and construction.
WARY OF THRESHOLD
The Cadillac Tax calls for imposing a 40 percent excise tax on higher-cost individual and family health insurance policies, originally beginning in 2018 and now delayed to 2020, Hughes said. The tax would be imposed on government and private-sector employers.
“Employers should be looking at their Cadillac Tax now and making sure they are not above that threshold,” Hughes said.
The latest GOP health care bill called for delaying the Cadillac Tax until 2025.
While the ACA needs a lot of changes, Hughes said he doesn’t think it needs to be repealed.
Whether it’s ACA of Trumpcare, there is nothing in these bills that helps employers, and costs are still projected to rise, Hughes said.
The nation needs a plan to provide support, even after a transition from the ACA, by empowering states with increased flexibility, modernizing Medicaid to prioritize its most vulnerable members and making it easier for Americans to buy the coverage of their choice, Davis said.