.jpg)
Uncertainty Reigns on Healthcare Reform
The bulk of the changes involved in the healthcare reform bill approved by the House on Sunday as well as the soon-to-be-acted-upon reconciliation in the Senate won't impact employers until 2014 and 2018. And with fierce opposition continuing, a wise HR leader may opt to just take a wait-and-see attitude. A few changes will go into effect later this year, however.
ByAnne Freedman
By
The concrete implications of healthcare reform will take place years after President Barack Obama signs the bill passed by the House of Representatives on Sunday -and the Senate approves a reconciliation bill.
The bill, passed by the House on a straight Democratic vote, will expand coverage to about 32 million uninsured people and is designed to cut rising healthcare costs, according to the Washington Post.
The Congressional Budget Office analyzed the total reform package as costing $940 billion over 10 years, according to CNN, but says the plan could reduce the deficit by $143 billion over the first 10 years.
The bill provides tax credits for about 24 million workers, who lack access to affordable coverage through their employers; requires all individuals to purchase insurance or face fines; and requires employers with more than 50 workers that do not provide coverage to do so or face significant fines. The president is expected to sign the bill Tuesday.
Helen Darling, president of the Washington-based National Business Group on Health, says the bill that passed, in conjunction with the reconciliation bill that will be considered, are better than the healthcare reform bills considered earlier in the process.
"If you think incrementally, as I do, we are better off than we were," Darling says. "There's still plenty of work to be done. ... I am not saying it's a good thing, but compared to what it could have been ... there is ample room for us to improve [the law in the long term]."
The impact on employers will be minimal at first -- and probably, uncertain for years, says Dallas Salisbury, president of the Employee Benefit Research Institute in Washington.
That's because Republican opponents of the bill will be focusing their election battles this fall and again in 2012 on repeal of the reform bill, he says. It's also because many of the bill's items that affect businesses don't go into effect until 2014 and 2018.
In addition, at least a dozen state attorneys general are planning to challenge the constitutionality of the legislation, once it is fully approved, according to the Christian Science Monitor. The state officials argue that Congress is breaking the law by including a provision that forces people to buy insurance.
For now, HR leaders need only consider healthcare changes that will go into effect in six months after final approval:
* A requirement that companies allow employees' children, ages 26 and under, to be covered on health plans as long as they don't have access to other employer-sponsored coverage;
* An end of annual benefit limits and an end of lifetime limits;
* Elimination of the ability for insurance companies to deny coverage for children with pre-existing conditions;
* A small-business tax credit of up to 35 percent of an employer's costs to pay for employee health-insurance costs; and
* Elimination of the ability of insurance companies to cancel coverage, except in cases of fraud.
As for the overall legislation, Salisbury says, "companies were in favor of something happening [affecting healthcare reform]. They don't yet know if this is what they want to happen. There's just a huge amount of evaluation to take place going forward."
But HR leaders should be wary of undertaking such an evaluation just yet, he says, because of the potential for repeal.
Salisbury says some HR executives may remember a similar circumstance in the mid-1980s, when Congress adopted a law requiring nondiscrimination testing and standards affecting health-insurance programs. Companies feverishly worked with consulting firms to help prepare for the law's impact, only to see Congress repeal it.
"Every dime they spent was a wasted dime. Every minute they spend on it was a wasted minute and, in fact, they had spent billions and they had spent a huge amount of time," Salisbury says. "In light of all this uncertainty [with the current legislation], do I spend a lot of precipitous money or do I say, 'let's wait and see what happens in the next two elections?' "
Generally, business organizations lobbied against the bill for some time, and opinions have not changed.
"It is unfortunate that the House of Representatives passed a healthcare bill that is going to increase costs and make it difficult for manufacturers to continue to offer generous health benefits," said John Engler, president of the Washington-based National Association of Manufacturers, after the vote.
In his statement, Engler noted that nearly all (97 percent) of NAM member companies voluntarily provide healthcare to employees, but said the legislation would hurt companies by instituting excise taxes on health plans; placing limits on flexible-spending accounts that would curb design options and place a tax increase on employees who use the tool; and including new industry-specific fees that single out particular industries to pay for healthcare reform.
Before the historic vote on Sunday, Gregory Folley, vice president and chief human resources officer of Caterpillar, the Peoria, Ill.-based construction machinery manufacturer, sent a letter to the president and Congress, saying the reform bill would increase its insurance costs by at least 20 percent or by more than $100 million, just in the first year of the program.
A costly aspect of the legislation for Caterpillar and other large, mostly manufacturing, mostly unionized companies is the institution of a tax on the subsidy relative to retiree health benefits.
That is "a huge blow" to the relatively few companies that offer such a benefit, Darling says. "It will accelerate what was already underway [of companies discontinuing such benefits] instead of helping companies hold on to provide the benefits."
Even with all of the uncertainty, HR leaders or corporate officials should make a point of talking to employees about the legislation, writes Jennifer Benz of San Francisco-based Benz Communications on her blog.
Benz writes that "communication is essential in uncertain times and not knowing all the answers is no excuse not to communicate. ... There's plenty that you do know about your benefits and healthcare strategy."
Salisbury says companies may want to tell employees that no immediate changes will occur and that they will not be adversely impacted by the legislation.
Some of the changes will be good for employees, he says, even if they may hurt corporate profits.
In addition, Darling says, there is a positive result for workers in that they know their healthcare needs will be taken care of should they become one of the millions of uninsured Americans (the number of which varies from 31 million to 48 million).
The reforms due to occur in 2014, according to a fact sheet put out by New York-based Sibson Consulting, are the creation of health-insurance exchanges, individual mandates to purchase coverage and subsidies to help individuals purchase coverage.
In addition, employers of more than 50 workers that have an employee who obtains subsidies for coverage in an exchange will be required to pay a financial penalty, beginning in 2014.
In 2018, the excise tax on health plans above a certain threshold -- known as the tax on Cadillac health plans -- would take effect, although Darling notes that "that's a long way away in politics."
All in all, Darling says, the key issue affecting healthcare has changed little.
"The one thing we know is that no matter what happens or doesn't happen, costs are still out of control, so HR leaders need to be continuing to work even harder controlling their healthcare costs and working with their employees [on wellness initiatives]. ... If anybody thought the government was going to be the solution to the healthcare cost crisis, I hope they have been disabused [of the notion]."
March 23, 2010
Copyright 2010© LRP Publications
