As 2014 nears, businesses can only guess what implications they face when major aspects of the so-called Patient Protection and Affordable Care Act kick in.
SOUTH BEND — There’s good news and bad news on the health front.
The bad news is that businesses are still guessing at what federal health care reform will do to them next year, since government agencies are still figuring out how to implement major aspects of the legislation that will kick in next year. And when all is said and done, the law may actually drive costs up for employers and employees.
The good news is that most employers won’t be dropping health coverage next year, even though it would be cheaper to do so.
Those were some of the major points made at the seventh-annual “Human Capital Summit” put on by Gibson March 14.
“The people who presented are experts in the field,” said Wes Mantooth of Gibson, a company which help employers manage benefits. The idea for the summit was to look at the current state of the expected impact of the Patient Protection and Affordable Care Act. The problem is, federal agencies are still trying to figure it out and haven’t given concrete guidance on next year’s implementation of major aspects of the so-called “Obamacare” legislation.
“From an employer perspective, there’s still a tone of uncertainty,” Mantooth said. “A lot of it is driven by so many different perspectives.”
WILL IT MAKE HEALTH CARE AFFORDABLE?
Rising health care costs have plagued consumers and the employers who provide health benefits for a long time. Dr. Eric Bricker, one of the speakers, said, “Health care is expensive because the prices are expensive,” and tracking down actual costs is very difficult. “Billed charges are really fictitious,” he said, because of the complex negotiations between health providers and insurance companies. “Those contracts are very complex. They take a lot of time to negotiate,” and once they’re done, hospitals inflate prices to get what they need to stay in business.
The reason they jack up prices, Bricker said, is “most hospitals lose money hand over fist” on Medicare and Medicaid patients — providers get only what the federal government will pay for services for those patients. Private insurance has to pay more than the cost of services to make up for the loss of money from federal patients.
Rick Dunlop, vice president of health exchange development for Ohio-based UnitedHealthCare, said, “The trends we’re seeing the last 15, 20 years, it’s not sustainable.”
Unfortunately, Bricker said, “All of that contracting, all of that pricing was not changed by health reform.”
In fact, he said, “Health reform could in many ways increase the cost increases in health care,” Bricker said. “Over time Medicare reimbursements are going to go down” to help pay for the legislation. Hospitals “need those commercial patients like you wouldn’t believe and they need to keep overcharging them. It’s going to mean more employer costs and more out-of-pocket costs,” he said.
Mantooth agreed that reform, “actually compounds that effect” of rising health costs.
Ross Winkelman, a senior actuary and managing director of Wakely Consulting Group of Denver, Colo., said, “I don’t see anything in the ACA that really is going to limit costs.”
WHO PAYS FOR ALL THIS?
The big losers over the next couple of years will probably be people who work for employers with young, healthy employees.
“The folks on the younger end end up subsidizing folks on the older end,” said Dunlop. “It’s going to be a huge increase.”
Mantooth said entrepreneurs with young staffs stand to lose.
“If you’ve done the right thing as a small group employer, you’re going to get nailed,” he said. In fact, why should employers spend the money on wellness programs when those programs won’t actually reduce insurance costs for the company or employees, he asked.
“It’s very oxymoronic, it’s a very hypocritical part of the law,” Mantooth said.
Everyone with coverage will end up paying for the reform. Mike Nader, an attorney with Faegre Baker Daniels in Fort Wayne, said additional taxes on insurance companies, medical devices and research will drive up rates, not to mention a roughly $63-per-person “surcharge” next year, plus the costs of meeting additional mandates in the law. “There are all kinds of hidden fees” built into the federal system, he said.
Federal taxpayers will also be paying for thousands of new agents with the U.S. Department of Labor, the U.S. Department of Health and Human Services and the Internal Revenue Service, all employed to enforce the new provisions of the law, Nader said.
WHY WON’T EMPLOYERS PAY TO GET OUT?
Despite the inevitable rise in costs, the health care experts don’t expect employers with 50-plus employees to drop employee coverage and pay a $2,000 penalty per each person beyond 30 employees.
“If I’m in a small group now with 40 employees, I still want to take care of my employees,” said Mantooth. He anticipates that 99 percent of Gibson’s clients plan to keep covering their employees next year. “They don’t want to be the guinea pigs,” he said.
Speaking to the hundreds of business owners and human-resources experts in the room, Dunlop warned that employers who do drop coverage and later change their minds will probably then be paying worst-case insurance rates.
Still, Bricker said, “It’s not all about money. It’s about keeping and retaining and hiring the best talent.”
Winkelman said something similar. “It’s not just the numbers, the dollars. It’s the people. Where are they going to end up and what will they think of you?”
Dunlop said, “You can do all the math ... people rely on us. When you think about the benefits, it’s very personal for the employee.”