Reform by Any Other Name
Healthcare Reform Panel
Prescription for Change
Not a Bitter Pill
Cut Out the Middle Man
Jim Dunnigan introduced House Bill 160, which actually passed, as a way to try to keep NAIC out of that business in the state of Utah. And it was a sensible thing to do. What it did was basically put some contract specifications on specific and aggregate contracting types. They now require a 1224 on groups under 50. And of course the Utah Department of Insurance will regulate that.
But I think what’s going to happen is that as this accountable care program rolls out, there’s a lot of unknowns and a lot of movement. It’s certainly been a fluid situation. But I think you’re going to see the federal government reach out from a taxation perspective and they will be going after the stop-loss community. The hit tax was easy, definable. But they just didn’t have their hands around the stop-loss industry like they did the fully insured industry. I’m convinced it is coming in some form or fashion.
BERRIDGE: I agree. I think that it will come around to the stop-loss market simply because there’s so many groups moving to be self-funded. We are seeing more groups moving to self-funded in the last three years than I did in the 15 before that—and very large cases to very small cases.
MODERATOR: What are the factors an employer would consider when looking at all the health benefit options? You can look at doing things the way you have done them. You can look at self-funding. You can look at becoming part of the exchange.
REIMANN: In regards to the exchange, the two advantages that come to mind for a small employer would be the small employer tax credit that increases from 30 to 50 percent in 2014. You can only take advantage of that if you are purchasing products on the exchange. The other would be the employee choice element. Many of you heard that the employee choice at the federal level isn’t a requirement for 2014. But Avenue H will have employee choice available and we may end up being one of the only exchanges in the nation that has that feature that first year.
BELL: How attractive is defined contributions?
CONNER: What we are hearing back from the marketplace is exactly what we thought we were going to hear when we started this program. One of the reasons employers are having a difficult time offering group insurance to their employees, especially those that are under 50 employees, is that cost of the contribution amount that they have to put in the commercial market. We have the flexibility that they can put whatever their budget can manage, and then they have an opportunity to reset that every year when the renewal rates come up, and they can see what the rates are. Some of them might want to keep it at the same level, but they are not having to absorb that additional increase that they would traditionally see in the commercial market.
We are actually seeing that it’s not only a good budgeting perspective for an employer, but also for the employee. They are actually seeing what an employer is contributing on their behalf, where a lot of the times that had not been disclosed to them. Now they can say, “My employer is really giving me that amount of money? Maybe health coverage is not as unaffordable as I thought it was when we can take a look at the actual plans that are available to us.”
MODERATOR: Let’s say you don’t go to the exchange but you have an employee that goes to the federal exchange—what does that mean to the employer? What are the penalties for that?
GRASSIL: If an employer has an employee who decides to opt out of the employer coverage and go to the exchange, what does that mean in terms of penalties?
If you are an employer and you’re offering benefits to all your full-time employees and the product is affordable, meaning the monthly premium is affordable, and the plan meets the minimum value, and that employee decides, “Well, this isn’t affordable to me. I still want to go to the exchange,” they are not going to qualify for the subsidies in the exchange. So there wouldn’t be a penalty to the employer, because there’s no premium tax credit or cost-sharing deduction that flags the penalty.
MODERATOR: What would stop an employer from just sending their employees to the federal individual exchange? Are there reasons why people wouldn’t pull out and just pay penalties?
GRASSIL: If you are a large employer you can certainly opt to not offer the coverage and send them to the exchange. But then as an employer you are going to be hit with that penalty. So you’ve got to weigh the cost of the penalty versus the cost of the benefits and what kind of employer you want to be.
If you are a small employer, that penalty isn’t there so your options are a little bit different.