Will health insurance reform help or hurt your business health insurance plan? For the last couple years, we’ve watched and heard a lot about health insurance reform. Since the Affordable Care Act is supposed to make things better, let’s think of it in terms of a medication for a bit.
One of our early clues that we needed to watch early came during health insurance reform’s clinical trials phase. This is where researchers make sure the pill does what it should to do, make sure it’s safe, and make sure it does not have adverse consequences. This is the phase where then-Speaker Nancy Pelosi declared in a speech to the National Association of Counties, “we have to pass the bill, so you can find out what’s in it.” The clinical trial should have determined what was in it before Congress prescribed health insurance reform for the nation. Unfortunately, we’ve new learned that the 1099 reporting requirement was not right for the country and both Houses of Congress have enacted bills to repeal it. We’re also learning that the research controls used by the non-partisan Congressional Budget Office have already changed with the Medicare Doc-fix in December 2010. That’s poor science and poor lawmaking.
We’ve become accustomed to hearing the symptoms that are treated well by medications prescribed for us. We agree the PPACA pill offers some benefits. For example, removing pre-existing conditions exclusions for people who are continuously insured was long overdue. Congress did that for group insurance plans in 1996. Problem is, the bill didn’t require continuous coverage. Making it harder to exclude children was another positive, except that it led to insurance companies not writing policies for children-only. Creating fairness regarding cancellation of health insurance while someone is seriously ill is another positive step. To be fair, there are other positives contained in the thousand of pages of the law and associated regulations.
However, we also learn about the side effects, some of which are as bad or worse than the condition being treated. (I was on a medication once for mild nausea for which one of the side effects was severe nausea.) That analogy fits health insurance reform and the ACA well. Here’s a quick look at some of the side effects making your health plan sick.
Budget cramps The ACA caps FSA medical contributions at $2500 per employee, and many over-the-counter items are no longer eligible for reimbursement. For many families using FSA plans, this results in an increased tax burden and greater personal expenses.
Bottom line indigestion: A recent study by Lockton Benefit Group found that the ACA added 2.5% of to the cost of employer-provided health insurance for 2011. Using an average premium of $11,176, this results in an added $280 per employee per year. In 2014, the ACA adds another 7.7% to the costs, even before inflation. More recently, United Healthcare reported small business rates would rise 25-50% in 2014 and individual plans would see increases of roughly 110%.
Health plan flu: Many companies are achy and nauseous when they look at long-term costs of health insurance benefits. Lockton’s research found employers believe it will be less expensive to pay the ACA penalties than keep group health insurance benefits.
Financial fits: Unfortunately, the only treatment is a personal walletectomy. Studies show that families will see an increase in cost ranging between 101 and 155% over their current payroll deduction if they have to rely on ACA’s state insurance exchanges. A premium of $400 a month before taxes becomes $812 after taxes.
Twisted arm pain: Companies are feeling arm pain as government twists it behind them with new rules about minimum essential benefits and taxes on expensive plans, even when an employer really wants to offer its employees great health insurance. Do we really need government to protect us from being well taken care of?
Ruptured Benefits: Many will surgically remove benefit plans to stop the pain. As one executive commented, “We won’t be the first to eliminate health benefits, but we won’t wait around to be third either.” Many small businesses won’t have a choice.
The more we look into health insurance reform, the more painful it looks.