How to conquer Obamacare, Pt. 1: A battle plan for brokers, employers and carriersArticle added by Philip Eide on November 23, 2012
Shaker Heights, OH
Joined: December 12, 2010
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This is the first in a two-part series looking at the Patient Protection and Affordability Care Act (PPACA) — sometimes referred to as Obamcare or ACA. This first article provides background on PPACA with links to valuable information for brokers, employers and carriers. The second article will provide a workable, efficient, and cost-effective strategy to help brokers and employers deal with PPACA for the 2013 plan year and beyond.
A little PPACA history
Since March 3, 2010, when President Obama signed the Patient Protection and Affordability Care Act there have been significant changes to the group and individual health insurance markets The Supreme Court ruling of June 28, 2012 further fueled the concerns about a disruptive change to the industry for carriers, brokers and employers. Wikipedia provides the following summary:
PPACA is aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care. It provides a number of mechanisms — including mandates, subsidies and tax credits — to employers and individuals in order to increase the coverage rate. Additional reforms are aimed at improving health care outcomes and streamlining the delivery of health care. PPACA requires insurance companies to cover all applicants and offer the same rates regardless of pre-existing conditions or gender. The Congressional Budget Office projected that PPACA will lower both future deficits and Medicare spending.
With the re-election of President Obama, the changes are now inevitable. For many reasons, most carriers, brokers, consultants and employers had been reluctant to prepare or implement strategies based on the lengthy PPACA legislation that did not provide many details. Now there is no more waiting Recently the Fed, utilizing healthcare.gov, published a timeline for the implementation of PPACA from 2010–2015. This is a graphically rich resource for gaining a better understanding of what needs to be done and when.
Where we are today with PPACA
A great deal of time, energy and money has been spent by the insurance and benefits industries trying to defeat PPACA. Unfortunately, there were only a limited number individuals and organizations dedicating creative time, energy, expertise and money to dealing with the realities of implementing PPACA. The focus has not been on creating compliant strategies coordinated with a set of integrated benefit/insurance plans.
The good news is that some specialists focused on their specific market sectors, i.e., individual plans, voluntary plans, technology, enrollment, administration, etc. They were active creating plans, programs, and/or services to take advantage of PPACA.
Health care reform put a focus on only one part of the overall benefits and insurance needs of employees and individuals: the health insurance component. This focus was a major set-back for strategic benefit planning. A number of constituencies were directly impacted, including:
- Carriers were forced to expend their time and energies in deciding whether or not to produce PPACA-compliant health plans for groups and individuals. They were also forced to focus on the new Medical Loss Ratios (MLRs). Here is a link to federal MLR guidelines.
- Brokers were forced to abandon or restructure their business plans as health insurance carriers dramatically reduced commissions on traditional group health plans to assist in compliance with MLR. An recent AISHealth/Health Plan Week article analyzed this trend. A summary of a Henry J. Kaiser Foundation survey published on LifeHealthPro in June was titled "Kaiser: 73% of brokers dislike; 20% like it."
- Brokers were also forced to continually take a wait and see position pending the Supreme Court ruling and then the election when making recommendations to their employer groups and individuals. While brokers hoped to avoid the disruptive changes caused by PPACA, most new it was inevitable. The dilemma was simple: What to do? Employee Benefit Advisor described this dilemma in a September article by Nelson Griswold titled "2014: Will your agency be ready?"
- Smaller employers became reluctant to offer health insurance to their employees or started to consider dropping their exiting plans. With the details of PPACA unclear – and with a threat of additional plan costs – employers saw offering benefits as a threat to staying in business. Health Reform.com addressed these issues in a study titled "Helping the bottom line"
The original PPACA provided limited details on exchanges, tax credits and penalties applying to a small business grappling with offering health insurance plans to their employees. A news release from Healthcare.gov titled "Small business and the Affordable Care Act" provides details on how "The health care law provides tax credits and soon - the ability to shop for insurance in exchanges...."
- Larger employers became equally confused about the ramifications of continuing to offer health insurance benefits to employees. The law firm of Michael Best & Friedrich LLP published a lengthy outline about the effects of PPACA titled "Summary of changes affecting employers under the PPACA - Amended". This outline demonstrates the need for a strategic benefit plan.
Larger employers who prefer longer-term strategic benefit plans were confused by the potential penalties under PPACA die to its lack of details. The Congressional Research Service provided the following clarifications titled "Summary of potential employer penalties Under PPACA (P.L. 111-148)."
It's time for carriers, brokers and employers to take action. Part two will outline workable, efficient and cost-effective strategies to help brokers and employers deal with PPACA for the 2013 plan year and beyond.
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