It’s possible that “affordable” might not have been the best “A” word to use in the Affordable Care Act, a consultant told a roomful of human resources managers at a Wednesday morning breakfast.
“They should have used ‘accessible’ instead,” said Evan Gady of Hylant Group Inc. “I don’t necessarily think it’s a bad thing, but I just think there’s a lot of cost attached to it.”
Providing access to health insurance for 49 million uninsured Americans, including no more denials for pre-existing conditions, is going to be expensive.
How expensive, exactly, is one of the many, many things yet to be determined as the ACA and its accompanying 33,000 pages of rules begins to take shape.
The new law is extensive, to the point where employers are sending 12 pages of benefits explanation forms to employees just to comply with the specific format the ACA mandates, Gady said.
Most recently, many employers sent out notices to employees explaining their right to purchase health care insurance from one of the newly created exchanges, despite the fact a delay in implementation of employer mandates meant they weren’t required to.
Employers may have until 2015 to comply with several mandates from the Affordable Care Act, but they’d better spend 2014 getting ready, Gady said.
“The choice before employers is to manage costs today or pay higher premiums and fees for non-compliance,” he said.
Peformance-based health care, which rewards and punishes providers and employers depending on patient outcomes, is the reality of the new law.
There’s even a new branch of government created by the law, the Patient-Centered Outcomes Research Institute, which will be funded through fees on group health plans, Gady said.
Kathy Horton, human resources director for the city of Kokomo, said she’s estimating the city must pay about $100,000 in fees the first year of the program. Most of that money will go into a pool that will be used to narrow the gap in premiums between younger and older individuals.
For individuals, Gady said the new health insurance marketplaces created by the ACA only really matter if you don’t already have insurance.
“If you have something today, you’re probably fine,” Gady said. “This is really built for the people who have nothing today.”
For employers, however, complying with the new law without hurting their bottom line or losing key employees will require strategy.
For instance, one of the controversial aspects of the law sets premiums for small employers (less than 50 full-time employees) based on the actuarial characteristics of the zip code where the company is headquartered.
That means if a company is based in a zip code where older individuals in bad health reside, it could negatively impact the company’s group premiums. Some employers might decide to move to healthier, younger areas as a result, Gady said.
The ACA also defines “affordable” insurance as something which costs an individual less than 9.5 percent of what appears in Box 1 (wages, tips and other compensation) of his or her W-2 form.
Many employers, Gady said, have employee contributions which are much less than 9.5 percent of the employee’s gross income. But by setting the 9.5 percent figure as the maximum limit of what’s considered affordable, some employers may start raising employee contributions to that level.
Jim Alender, CEO of Community Howard Regional Hospital, said the law is certain to create a new group of individuals who have health insurance for the very first time.
Of the 49 million uninsured, Gady said the federal government is expecting at least 10 million to purchase insurance.
How hospitals manage access — how they pair individuals who need care with medical resources — will be crucial.
“What we cannot allow is for all of them to default to the emergency room,” Alender said.
Recruiting new primary care physicians, including OB/GYNs, family practice and pediatrics doctors, will be important, he said.
“Our costs will be determined by managing that access,” Alender said.