PPACA

Healthcare Reform Rising Costs of Benefits Puts Onus on Employees

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Up to 159 million Americans (52 percent) are covered by employer-sponsored plans. The Affordable Care Act is changing the group health insurance scenario. Employers are concerned about the rising cost of per-employee benefit costs and are expecting their employees to contribute more out of their pay checks to the benefits package. This is borne out by the results of several studies, including ERCs recently published 2011/2012 Policies & Benefits Survey covering Northeast Ohio employers.

Recent Deloitte and the International Society of Certified Employee Benefit Specialists (ISCEBS) research1 indicates that 85% of employers expect new health insurance law to raise per-employee benefit costs. Employees are expected to help employers face this challenge by paying more out of their pay checks to their benefits package. In fact, the focus on controlling healthcare costs is evident: 73% of the employers surveyed said that health care reform will push them to reevaluate their benefits packages over the next 12 months in light of health reform changes. Sixty-two per cent of employers have already made cost-sharing a part of their benefits packages.

Two-thirds of the Deloitte employer respondents are making no immediate changes to their benefit programs and adopting a “wait and see” approach for final healthcare reform provisions that may reduce plan design flexibility.

More controversial was the recent McKinsey & Company survey2 of 1,300 employers in early 2011 which found that 30% said they would “definitely or probably” stop offering employer coverage after 2014. Nearly half of the employers said they would consider alternatives to their current plans, including an insurance option that would only offer coverage only to certain employees.

A survey conducted by the Kaiser Commission on Medicaid and the Uninsured and the Urban Institute3 last year showed that in 2010, employees with coverage contributed a greater share of the total premium, a significant change from the steady share they paid on average over the last decade. In 2010, covered employees on average contributed 19% of the total premium for single coverage (up from 17% in 2009) and 30% for family coverage (up from 27% in 2009).

According to ERCs 2011 survey, Northeast Ohio employers report that the average health insurance deductible paid by employees has risen significantly since 2009. As organizations strive to cope with the increase in costs, they are resorting to greater cost-sharing with employees. The survey indicates that employees’ co-pay amounts and contribution to group health insurance premiums also increased in the last two years.

Competing objectives are complicating matters. Deloitte/ISCEBS rates employers top five total reward priorities as:

Cost of healthcare benefits Employees willingness to share more of the benefit Ability of the benefits program to attract, motivate and retain talent Ability to comply with and adjust to PPACA’s mandate Clear alignment of total reward strategy with business strategy and brand

Health Care Reform, and the Obama Road to Socialism (Ruin)

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Life and Health Quote and ApplyI am only interested in speaking with those who indicate that they are in the market. So dont worry about the contact points, I wont contact unless you initiate a request for consultation. Thank you.

I have been promising to write an article on the Health Care reform items that became law September 26th since probably September 1, 2010. Because I have not in fact produced the article, one may consider that I am procrastinating.Although I have written many original articles and spun many others onto my blogs for post fodder, since that time, there is only one issue that has prevented me adding this article to my portfolio of web based banter. The obvious attempt to move to socialized medicine, which “wouldnt include a public option” distresses me to the point of confusion, over whether I want to educate the public as to why their health insurance bills are going to be going up, or do I want to wax eloquent, on the diabolical and seemingly inperceptible tactic that Our Congressional and Oval Office leadership is using to grind us down the trail to socialist medicine, while enhancing their ultimate goal of creating the Union of Socialist States of America. Having contributed considerable effort to the spread of many carriers free market (and I admit freely, also the medicare based) products into my 5 state jurisdiction, I have decided that there is not much future in continuing that effort, so with this article I am also announcing, that the insurance part of my posting is going to be placed deeper in the site, and perhaps even eliminated, depending on the future course of events, and whether or not we throw some of the communists out of congress this November, and correct our course of action, to one more consistent with the ideals of the founding fathers. In short the insurance agency is gonna be back burnered, and marketing and marketing consulting is going to be my gig going forward, I will keep my tickets in TN and NC, and I will concentrate on my insurance operation again, when it again becomes a useful (read profitable) use of my time and effort.

So the political and economic rant aside, heres what is happening on the Health Care “reform” front.

Effective 23 September, 2010 the following changes were legislated in place, with Obamacare. I am going to take the liberty of pointing out the areas of change which lead to an increase in your direct health insurance premiums. While most of the new rules of the patient protection and affordable health care act (what a nice title for the plan that increases premium costs to a painful amount while telling you what a good deal youre getting) have a grandfather clause, most carriers will not use the grandfather clause, and will comply with the intent of the new legislations spirit, from September 23, 2010 until they leave the business, which will be sooner, rather than later, should the PPACA remain in effect as planned. Oh, wait, our fearless leader did promise you could keep your current plan, didnt he? How is that working out for the McDonalds Franchises work force? Dont worry, only a few hundred thousand more on the uninsured rolls, as we “progress” toward the single payer glory

1.The first new benefit is the elimination of lifetime coverage caps. While that sounds good to the sick or malingering, one should remember that what happens when risk is shifted to the carrier is consistent with economics 101 principles. When the item costs moreyou pay more. This paragraph will add cost to health care plans, in a universal manner. Whether you like this aspect of the legislation, or not.

2.Annual dollar limitations are prohibited, with the exception of restricted annual limitations for “essential benefits” that are increased annually until completely eliminated in 2014. Sounds confusing, but the end result will be effective elimination of these restrictions. Again, sounds nice to those who hate the insurance companies, however, it will increase the cost of your health insurance, as once again the risk rises for the insurance company. Additionally, the limited benefit plans that make a form of insurance affordable for some lower income individuals and families, are likely to disappear, and those costs as a result of uninsured emergency room use, etc. will have to be absorbed somewhere. Strangely enough, adding to our overall health care costs.

3.Recission and Cancellation of coverage is now prohibited, except for fraud or intentional misrepresentation of material fact. While it is nice that they wrote this down, most carriers in fact already operate in accordance with this concept. The only way you lose most any carriers coverage, is by not paying, funny, but the companies like to have you pay for your insurance. This rule is not likely to adversely effect your premium outlay as much as the others, and it does codify current quality carrier modus operandi.

4.Preventive services. Going forward preventive services will not be considered part of a copay or deductible scenario, all costs for preventive services will be absorbed by the carrier. Again, many quality plans were already absorbing these costs, so those who have the type of plan where this is already in force, will not see an increase in cost due to these factors. And this is certain to sound like it is a benefit to the enrollees, However there will be an increase in the aggregate cost of health insurance due to this portion of the bill, causing premiums to rise.

5.Extension of dependant coverage. From the 23rd of September, 2010 going forward, young adults up to the age of 26 may remain under their parents coverage, either group or individual. While it is wonderful that the student demographic may maintain their dependence on parental coverage for a longer period of time, for the student, the opportunity for quality, independent coverage has existed for a long time. Where this part of the bill is going to increase cost is in the vast majority of the currently insured demographic, where new costs on existing plans are going result in increasing premiums. By now you are starting to get the idea, Obama care really wont drive your healthcare costs down. In either the short term, or the long term, as you will soon see.

6.Appeals Process. Each carrier must have an internal appeals process that allows enrollees to review their files, to present evidence and testimony as a part of their appeals process. Plans must also have an external review. The process must include at least one level of appeal for individuals, with a mandatory turn around time of 24 hours for an initial determination, on urgent care matters. Most carriers are going to have to do some work to comply completely with this section of the law. One aspect of the law that I believe truly reflects the world centrist/socialist ideology of the Obama administration, is the language appropriate caveat, placing the onus onto the carrier for linguistic “appropriateness” read ability to speak to the enrollee in their language, the case for establishing English as our national language notwithstanding. Of course not to mention that the additional requirements mean additional costs, and will help to contribute to the rising cost of Health insurance premiums.

7.Emergency Service. Plans that include coverage of emergency services, are required to provide such coverage, without the need for prior authorization, ensuring that a bloody nose can more easily be parlayed into rhino-plasty on your dime, the providers are going to suffer cost increases as well with this one, as facilities are forced to take in network rates for these services, regardless of the plan carriers payment terms. In reality, most quality plans already had this provision built into their portfolio, however there are costs involved, and putting the caveat on discounted plans will result in fewer of them being here next year.

8.Access to Pediatrictions. This paragraph in the bill requires that children be allowed to have a designated Primary care Physician, (PCP) assigned in their network. There was never anything that really stopped this from occuring in the first place, but it sounds appealing doesnt it? It also provides a parallel paragraph on OB-GYN access, which is also already included in quality plans. Again, so much fluff, but now codified fluff

9.Prohibition on Pre-existing conditions exclusion for Children. If you have young athlete in the family, who has a tendency to visit the emergency room on occaision, or an incurable illness that started from birth or anywhere forward, this addition to the requirements is a redress for you. If you do not have a condition in your family, this is going to cost you anyway. While I am in favor of coverage, regardless of a childs condition, I feel compelled to tell you, that this costs more for the insurance companies to do, and that cost is going to be passed back to the consumer, in the form of higher health insurance premiums.

There are in fact 3 additional areas of law that became effective on the 23rd of September, Uniform coverage documentation and standard definitions, which in effect refers to the language of medical insurance claims; Incurred loss/claim reporting requirements, which will simply be a new accounting format for summary expenses by category; and finally, Loss Ratio Standards, with the inclusion of a mandatory rebate provision for all enrollees in a plan that exceeds loss ratio standards, in other words, the cap on earnings that any plan can attain. While I doubt many rebates will be processed with the addition of all the costs associated with ObamaCare, the end result of this legislation is a guarantee, that private insurers are on their way out of the business.

I am presenting the facts as they stand at present. I am not offering a position, although you may conclude, accurately, that I am not a fan of the PPACA. The fact remains that most of these newly implemented laws will result in increased costs for private insurers. And these increases in cost, will result in higher premiums. If you dont believe me, just stand by and watch, as our private insurers leave the business one by one. Unless we can implement some change, like fire all the socailists we have employed in our government at this moment in time.

As I close my active effort in the health insurance industry, I must offer one last piece of solid advice to my indivdual and self health care plan sponsoring clients, if you are not in an HSA, get in one. The form is going to survive the health care “reform” regardless of its final form. The cost of premiums has been less than traditional plans for years, and the tax advantage of owning one offsets any perceived additional out of pocket risk you may be looking at, if you can do the arithmetic. you will see what it means, I promise, its not even algebra. will fill an interim gap as there is one, as I close I4financial.com, I will put up quoting links on , under the insurance pages section, in a week or two, given time constraints. You will be able to competitively quote all five major carriers I represent, all of whom are in full compliance, Aetna, Assurant, Humana, United HealthcareOne, and BCBS of TN. I will not pull that feature down, until they are all out of the marketplace. Which is inevitable under the current PPACA. I may post short updates to this posting, if there is any activity over on the insurance pages, if there is none to respond to, I will sign off for now, and wish everyone good luckoh and I am going to say it, I have been wanting to for 2 years nowif youre not in an HSA you are not using your head for anything other than a hair growing surface, or lack thereof

Kenneth James Ford
MBA/Entreprenuer/Insurance General Agent/==>Marketing Consultant/Internet Marketer

Health Care Reform’s Effects on Employers

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I came across this paper written in July of 2010, and it still applies (at least until January 20th of next year). It outlines what is scheduled to occur in 2014 with small employer premiums under PPACA. First of all, a small employer is defined as any company with fewer than 50 employees. Large employers (50+) will have to pay penalties if they do not offer group health coverage. As far as I know, there is no penalty for small employers not offering it. There are some factors in California that may mitigate big premium hikes. Actually, we have had small group reform here for the past 19 years. It began in 1993 with a requirement that all employers with 5 or more employees be issued guaranteed coverage. In 1994 the minimum was lowered to 4 employees, and by 1996 it was lowered to 2 or more. The impact of this has been to stabilize the market over the long term. Group rates are already higher than individual rates because every employee that is eligible cannot be declined and all group plans must offer maternity coverage. Since the mandated addition of 100% free preventative care to all plans as a result of PPACA, premiums have not gone up as much as I thought they would, and in some cases have gone down. Keeping people healthy by early detection of problems should have a beneficial long-term impact.

What probably will have a negative impact on rates is the shrinking of the rate categories based on age. For example, rates are now broken up into 5 or 6 age groups, under 30, 30-39, etc. In 2014 there can be no more than a 3:1 difference between what is charged a 64 year old and an 18 year old. So if the premium for an 18 year is $150, the rate for the 64 year old could be no more than $450. The paper also talks about the removal of gender-based ratings, but California hasnt had them since the early nineties.

Will premiums go up? Of course they will, but I think California is better positioned than some other states. I have read comments by some that say “why should I pay for the people that dont want coverage and wont buy it?” My answer is that we all are already paying for the uninsured that either cant or wont get coverage, because they still use the health care system. And they use it for free. The rest of us pay for them in the form of higher health care costs and higher insurance premiums. From my point of view, and that of many on both sides of the issue, the biggest problem with the individual mandate provision that is before the Supreme Court (aside from the question of its constitutionality) is that it is not stiff enough. It is actually cheaper to go without insurance and pay the penalty than to buy coverage. But that was the result of political compromise. Too bad, because the one common element of every stable health care system worldwide is covering nearly everyone.

Of course all of this may be moot if Mitt wins. If he does, we may see some big changes to the Act. That might not be such a bad thing, but it should be noted that the health insurance industry has already priced many of the anticipated changes into their products, and some have said that it would actually cost them more to make changes once again so soon. Well just have to wait and see what happens. Hope this is helpful.