Archive | Employers Reaction to Bill

Will Employer-Sponsored Health Insurance Survive?

Will the link between employment and health insurance survive?

That’s one of the serious questions that a new report from the Employee Benefit Research Institute (EBRI), a nonprofit research organization based in Washington, D.C., raises about the future of employee benefits.

  • Paul Fronstin, head of the health research and education program at EBRI, noted that the Affordable Care Act “levels the playing field like it’s never been before,” as employees will not necessarily have to depend on getting health coverage through work.

“Employers are just not sure if they’ll be offering coverage in the future,” he added.

  • In fact, the U.S. Congressional Budget Office estimates that 3 million to 5 million fewer Americans will obtain coverage through their employer each year from 2019 through 2022 than would have been the case without the ACA.

Starting next year, the ACA will require employers with at least 50 full-time employees to offer a minimum level of health coverage to workers, but some employers may prefer to pay a tax penalty instead of paying for the coverage. The need to recruit and retain good talent is what keeps employers offering benefits.

Kathryn Gaglione, a spokesperson for the National Association of Health Underwriters, says, “Offering comprehensive, competitive benefits makes for a more robust workforce and better compensation for individuals trying to support families … Many American business owners understand the benefit to offering employees and their families coverage. Employer-sponsored health plans might change, but they won’t be going anywhere.”

Most employees want and expect health insurance through their employer, especially knowing that it’s much less expensive to receive group coverage that comes with an employer’s premium contribution than to buy individual coverage on a health insurance exchange (with no employer contribution).

Nonetheless, “one could argue workers won’t need their employers any more for health benefits once the law is fully implemented, and health exchanges become a viable option to job-based health benefits,” Fronstin said.

*Modified from an ebabenefitsnews.com article

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New Obamacare Enrollment Data: Employer-Based Coverage Declines

New data show that the number of people who have private health insurance increased by just over 520,000 in the six months between October 1, 2013, and March 31, 2014. That was because almost all the gains in individual coverage through the Obamacare exchanges were offset by reduced enrollment in employer-sponsored group coverage.

During the same period, Medicaid enrollment increased by about 5 million, principally as a result of Obamacare expanding eligibility to able-bodied adults without dependent children.

Because of delays in the exchanges processing enrollments and a “surge” in exchange applications in March, it is possible that a further 3 million to 4 million individuals may have gained individual coverage since March 1.

  • However, even if that proves to be the case, and even if there is no further erosion in employer coverage, more than half of any increase in coverage during 2014 will still be due to Obamacare’s expansion of Medicaid.

Modified from a heritage.org article

 

 

 

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Will Obamacare Cost You Your Job?

Why is our recovery from the Great Recession so sluggish and so slow? Economists are increasingly focusing on the Affordable Care Act. Although generally thought of as a measure to insure the uninsured, health reform is affecting the entire labor market in negative ways.

  • The employer mandate to provide health insurance will cost almost $6 an hour for family coverage. This health minimum wage (on top of the money minimum wage) raises the cost of labor, and may discourage hiring.

There are two ways that employers can get around it: stay small and employ part-time rather than full-time employees.

  • The employer mandate, which kicks in in about a year and a half, doesn’t apply to firms with fewer than 50 employees. Suppose an employer has 49 low-wage workers. Because these workers can get highly subsidized health insurance in the (ObamaCare) exchange, they don’t want health insurance from the employer. They would rather have the cash equivalent in the form of higher wages.

Now suppose the employer hires one more worker. Not providing health insurance at this point subjects the employer to a $2,000 fine for each employee.

Bottom line: hiring one more worker will cost this firm $100,000.

  • The mandate also doesn’t apply to employees who work fewer than 30 hours per week. To continue with the above example, if instead of hiring a 50th full time worker, the employer hired two part-time workers he would avoid the requirement to provide health insurance or pay $100,000 in fines.

For firms that have already exceeded the 50 worker threshold, every time they reduce the hours of an employee below 30 they avoid the requirement to provide costly health insurance or pay a $2,000 fine. Moreover, the economic incentive to work fewer hours affects employees as well as their employers.

A University of Chicago economist estimates that there are about 4 million workers who would be better off switching to part-time work. Once they reduce their hours, they are no longer eligible for their employer’s health plan. After that, they are entitled to generous subsidies in the health insurance exchange. And the subsidies in the exchange are greater than the lost wages.

Writing in the Wall Street Journal the other day, Mort Zuckerman said:

  • Most people will have the impression that the 288,000 jobs created last month were full-time. Not so…. Full-time jobs last month plunged by 523,000, according to the Bureau of Labor Statistics. What has increased are part-time jobs. They soared by about 800,000 to more than 28 million….

There is another way in which ObamaCare may discourage work. For low-income families, the federal government is paying more than 90% of the cost of health insurance purchased in the exchanges. But that subsidy drops quickly as income rises and disappears completely at four times the poverty level ($46,680 for an individual and $95,400) for a family of four).

  • So when people earn higher incomes, they not only pay higher income and payroll taxes, they also lose subsidy dollars as well. In fact, because of peculiar quirks in the formula, a family can lose $10,000 or more in subsidies by earning just one more dollar of income.

When loss of health insurance subsides is added to income and payroll tax rates the net effect is quite high – even for the average family. ObamaCare imposes the third largest increase in marginal tax rates in the past 70 years, lowering the return from working by 10%.

A Harvard economics professor explains, that implies a long term loss to the economy on the order of 5% of GDP – or more than $800 billion a year at current prices. That’s about four times the size of the direct ObamaCare spending.

This indirect cost to the economy equals more than $8,000 per household per year.

Modified from a townhall.com article

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Employers continue to shift health care cost burden to employees

With health care costs continuing to rise, it’s no surprise to benefit advisers that their employer clients continue to seek benefit solutions that shift some of the cost burden to their employees — and new data reveals that trend shows no signs of stopping.

Most employers now require employees enrolled in group health plans to contribute toward the cost of their coverage. In 2013, more than 83% of employees enrolled for single-coverage in an employer-sponsored health plan made a contribution toward their plan premium, according to a medical expenditure survey released Wednesday by the Agency for Healthcare Research and Quality.

  • The survey found just 16.6% of enrollees taking single coverage did not make a contribution toward the plan premium; and only 6.9% of enrollees in employee-plus-one coverage and 7.9% of enrollees in family coverage did not.

The number of employers covering the full cost of health care plan premiums continues to decrease, says Beth Crimmel, a survey statistician with AHRQ. Although employers in the past often covered the full cost of a plan premium, “That’s becoming much less common,” she says.

  • In addition, average annual total premiums across all three coverage types were up in 2013 compared to 2012, she says. The average total premium for single coverage per enrolled employee was $5,571 in 2013 for the private sector — a 3.5% increase over the $5,384 single premium for 2012. For employee-plus-one coverage, the average total premium also increased 3.5% in 2013 to $10,990. Family coverage had an average total premium of $16,029 in 2013, up 3.6%.

The average annual dollar amount that employees contributed toward their premium also rose for all three types of coverage in 2013 versus 2012. For single coverage, the 2013 average contribution was $1,170, a 4.7% increase over 2012. For employee-plus-one coverage, the 2013 average was $2,940, a 4.1% increase. And for family coverage, the $4,421 average contribution was 4.4% higher than in 2012.

The survey also found in 2013, 51.3% of employees who enrolled in a health insurance plan through their private-sector employer chose single, employee-only coverage.

Modified from a Employee Benefit Advisor article

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Federal audit faults California exchange for lax enrollment practices

Federal auditors found that California’s health insurance exchange was lax at times in verifying consumers’ eligibility for Obamacare coverage. The report issued by the Inspector General’s Office at the U.S. Department of Health and Human Services also cited the federally-run exchange and Connecticut’s insurance marketplace for similar deficiencies.

  • “The California marketplace’s process for verifying citizenship was incomplete,” federal auditors said in the report. California, in particular, fell short on verifying citizenship, resolving inconsistencies on eligibility, entering paper applications correctly and maintaining enrollee data, according to the report.

Auditors said lax internal controls may have limited the exchanges’ “ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment.”

  • The audit knocked Covered California for not verifying the citizenship of seven applicants through the Department of Homeland Security when Social Security information indicated they weren’t eligible or data was lacking.

During open enrollment, Covered California often needed to resolve inconsistencies on customer applications and get further documentation.

The audit found that in 19 of 25 applications it reviewed, Covered California didn’t resolve those discrepancies.

The federal review only covered the first three months of open enrollment, from October to December, and focused on a sample of 45 applicants in California.

The Covered California exchange agreed with some of the criticisms and disputed others in a response to the audit.

Covered California told auditors it “did not have the resources to resolve all inconsistencies as required” and in some cases reviews weren’t being completed within the normal 90-day period.

In a May 29 letter to federal auditors, Covered California’s executive director, Peter Lee, noted that the findings are based on a very small sample compared to the 1.4 million people who signed up in the state through mid-April.

“This sample was taken very early in the first open enrollment period and improvements have been ongoing to ensure program integrity,” Lee wrote. “Systems and processes have been and continue to be refined and improved.”

The exchange also said its efforts were hampered by the federal data hub frequently being offline in the fall.

*Modified from a latimes.com article

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What Will Obamacare’s Future Look Like?

Obamacare is dramatically reshaping health care markets, especially the individual insurance market. The first results of the law’s standardization of coverage and imposition of new government benefit mandates and regulations were increased premiums—quite substantial in many cases—and the loss of existing coverage for several million Americans.

Obamacare’s longer-term consequences are still a topic of considerable debate among experts—in large part because it is hard to project what health insurance markets will look like if Obamacare remains in place. That’s because doing so requires making assumptions about how the law’s numerous provisions will interact over time. Even so, here are some recent predictions:

  • Higher costs, more uninsured. One recent projection, from Stephen Parente, a health economist at the University of Minnesota, and Michael Ramlet of American Action Forum, used the administration’s reported 2014 exchange and Medicaid enrollment figures to model the law’s impact on health plan prices and enrollment over the next decade. Though the experience will vary from state to state, the authors project national cost increases for the Obamacare silver plan of about 25 percent for individuals and families within five years. In addition, they project an increase in the uninsured by about a half-million within five years.

They anticipate enrollment will grow significantly in the individual market in 2015 and 2016 but will drop in 2017 when Obamacare’s reinsurance and risk corridor programs end. They expect the end of those programs will cause premiums to increase. And, although Obamacare offers subsidies, they estimate the resulting growth in the cost of insurance will outpace the value of the subsidy, producing a decrease in private insurance coverage in the individual market and an increase in the uninsured.

  • Heavily subsidized high-risk pool. Ed Haislmaier, a health insurance market expert at Heritage, has analyzed insurer participation and health plan enrollment in the exchanges and expects “Obamacare to devolve into a heavily subsidized, Medicaid-like pool of low-income individuals in poor health.”

Also looking at the administration’s reported enrollment data, Haislmaier finds it significant that 65 percent of all enrollees chose a silver plan and 95 percent of those silver plan enrollees qualify for subsidies. Though it cannot yet be determined how many of those enrollees qualify for Obamacare’s cost-sharing reduction subsidies—which are available only with silver plans—it is likely that many do, and as Haislmaier writes, “[I]t should be seen as a flashing warning light that the exchanges are headed for what looks a lot like a giant, heavily subsidized, high-risk pool.”

  • He says Obamacare’s exchanges look a lot like Medicaid. In fact one-fifth of the insurers offering exchange coverage have Medicaid managed care as their principal or exclusive line of business—and many exchange plans offer only narrow networks of doctors and hospitals to enrollees, a tactic used widely in Medicaid managed care today.

Indeed, as Haislmaier points out, the CEO of Molina, one of the larger Medicaid managed care companies, stated that, “Medicaid is essentially an individual market for low-income patients … and Medicaid has premiums that are paid for by the state. The reason we went after the exchange is we feel there are a lot of similarities.”

  • Haislmaier says  “Obamacare is effectively designed to create heavily subsidized, Medicaid-like coverage for those who are in poor health and have incomes between 100 and 250 percent of the federal poverty line,” which qualifies them for the cost-sharing reduction subsides…What all this means is that Obamacare’s final destination is more a fiscal sinkhole than a market collapse. That is an ugly result, but it is a different kind of ugly result than what many currently expect or fear.”

$2 trillion spent, 31 million left uninsured. In contrast, the Congressional Budget Office’s latest report projects exchange enrollment to grow significantly over the coming years, reaching 25 million by 2017 and holding at that level through 2024. CBO also estimates that in 2024, there still will be 31 million uninsured individuals—even after spending almost $2 trillion over 10 years (2014-2024) to expand Medicaid and subsidize exchange coverage.

Under any of these scenarios for the future of Obamacare, health care costs and government spending will be higher, and America’s health care system still will be in need of real reform.

*Modified from thedailysignal.com article

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Analysts predict most employer-provided insurance will disappear as ObamaCare takes hold

Across the political spectrum, analysts now say that 80 to 90 percent of employer-provided insurance, the mainstay of American health coverage for decades, will disappear as ObamaCare takes hold.

The research firm S&P IQ predicts less than 10 percent of those who get insurance at work will still get it there ten years from now.

  • “The companies will really be hard pressed to justify why they would continue to have to spend the kind of money they spend by offering insurance through corporate plans when there’s an alternative that’s subsidized by the government” said Michael Thompson, head of S&P IQ.

Even a former adviser to President Obama, Zeke Emanuel, predicted less than 20 percent who now get employer-provided insurance will still get it ten years from now. He wrote in his book “Reinventing American Health Care” that “By 2025 few private-sector employers will still be providing health insurance.”

  • The reason analysts see this historic change in health coverage is because the tax penalty for not offering insurance — $2,000 per worker– is so much less than the cost of providing it.

John Goodman of the National Center for Policy Analysis explained that, “for a worker making only $15 an hour, typical employer coverage for a family costs $15,000 or $16,000, that’s more than half of that worker’s annual wage.”

  • “It would be too compelling for companies to not put their employees into exchanges. It’s just way too compelling.” To make it compelling to workers, as well, employers can bump up workers’ pay to help cover the deductibles and other costs in ObamaCare.

Former Congressional Budget Office Director Doug Holtz-Eakin  said,”you could give them more, so after taxes they end up with the same and the math says you still come out ahead. And so employers have been doing this math ever since the law passed. I expect for them to get to the exits pretty quickly.”

  • Employers would also get rid of the headache and uncertainty of providing insurance, he noted. “Most people are not in the health insurance business they are manufacturers, exporters, they are service providers. And they would rather stick to that than worry about health insurance.”

Goodman added, “they don’t want to be in the health insurance business. So if they see a low cost way to get out of it, many will jump at the chance.”

  • So employers can offer more pay to workers, pay the fine and still come out ahead, while workers would still get health care.

The only losers in all this would be the federal deficit and taxpayers, since many workers going into ObamaCare would qualify for subsidies, driving up the cost.

*Modified from a Foxnews.com article

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Employees hit with higher health insurance premiums

More employees are getting hit with higher health insurance premiums and co-payments, and many don’t have the money to cover unexpected medical expenses, a new report finds.

  • More than half of companies (56%) increased employees’ share of health care premiums or co-payments for doctors’ visits in 2013, and 59% of employers say they intend to do the same in 2014, according to the annual Aflac WorkForces Report. It’s based on a survey of 1,856 employers and 5,209 employees at small, medium and large-size companies.

In 2013, 19% of companies implemented a major medical plan with a high deductible (more than $1,000) and Health Savings Accounts as an alternative to a traditional medical plan, the study finds.

  • Employees are worried about covering their medical costs: 49% have less than $1,000 to pay for unexpected out-of-pocket medical expenses; 53% would borrow from their 401(k)s or credit cards to cover unexpected medical costs; 66% say they wouldn’t be able to adjust to the large financial costs associated with a serious injury or illness.

The survey also showed 69% of workers at least somewhat agree that they regularly underestimate the total costs of an injury or illness, including medical, household and out-of-pocket expenses. Many employees are in a “fragile financial situation” and couldn’t afford the out-of-pocket expenses of many medical situations.

The need to control costs is driving many companies’ decisions on benefits, Owenby says. The report shows that almost half of employers (49%) agree that controlling costs is the primary objective, and took steps to contain costs, including:

• 39% hired independent contractors or consultants.

• 32% eliminated or delayed raises.

• 22% eliminated or cut back on benefits.

• 21% changed some full-time workers to part-time workers.

The report notes that the Kaiser Family Foundation finds that health care premiums have increased 80% since 2003, nearly three times as fast as wages (31%) and inflation (27%).

*Modified from a USA Today article

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2.7 Million ObamaCare Enrollees Still Unaccounted For

Affordable Care Act: President Obama has for a while been bragging that 8 million people have signed up for ObamaCare. But the administration still hasn’t released the state-by-state numbers to back up that number.

As a result, we still don’t know where 2.7 million ObamaCare enrollees came from.

Here’s what we do know:

  • The exchanges run by 15 states and Washington, D.C., have reported final enrollment numbers at least through March, and most have numbers through April 15. The combined total for these exchanges is 2.6 million.

  • For the remaining 36 states, all we have are the numbers HHS released through February. At that point, these states accounted for 2.7 million sign-ups.

  • Add the two together, and you get 5.3 million. That means roughly 2.7 million must have signed up in just these 36 states after March 1 to reach the 8 million mark. And that means enrollment in these states must have doubled in just the last six weeks of a 28-week open enrollment period.

  • To call this an incredible achievement is putting it mildly, particularly since the state-run exchanges saw enrollment climb only 62% in those final six weeks.

So where did these 2.7 million come from? We won’t know until the HHS report comes out, which presumably could be any day now. But even if Obama can account for these fantastic gains, there are still several questions that need answering.

First, of course, is: How many have paid?

  • Georgia says that only 48% of the 221,604 who enrolled through March 31 have paid their premiums. In South Carolina, only 59% of the 114,789 who enrolled through April 15 had done so.

  • Another question: Do the numbers account for people who dropped coverage earlier? We know at least some have been kicked off for nonpayment, and others canceled their plans for one reason or another. Is HHS netting out these losses, or is it simply adding new enrollment numbers on top of the old ones?

  • And, did the agency screen out duplicate enrollments? One broker told us that in the last month his company was encouraged to simply start a new application if something went wrong during the process, so as to speed things up. He figures 30% of the ObamaCare applications his firm handled in the home stretch were duplicates. Did these get counted in the final tally?

The mainstream media, unfortunately, have shown zero interest in trying to make sense of these numbers, much less independently verify them. Instead, they obeyed Obama’s command to “move on.”

But until we get more data, and get answers to these questions, we’re reluctant to accept any ObamaCare numbers put out by this administration.

Modified from an IBD.com article

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Obama Says Health-Insurance Enrollees Reach Eight Million

WASHINGTON—President Barack Obama said Thursday that eight million people had picked health-insurance plans through the Affordable Care Act, a number that significantly outstripped initial projections and emboldened him to step up criticism of Republicans seeking to repeal the law.

The eight million sign-ups go beyond earlier projections by the Congressional Budget Office that six or seven million people would enroll through the exchanges in 2014. Mr. Obama pointed to the number to declare the law a success and that Republicans should stop trying to overturn it.

“The point is, the repeal debate is and should be over,” the president said. “The Affordable Care Act is working and I know the American people don’t want us spending the next 2½ years refighting the settled political battles of the last five years.”

Some 35% of those who signed up through the federal health-insurance exchange were in the coveted under-35 demographic, Mr. Obama said. The participation of younger, relatively healthy people is needed to balance out the cost of medical claims from older and sicker ones.

The announcement contained few other new details about enrollment. Republicans quickly pointed to missing information—such as the number of people who had actually gained coverage after being uninsured, as opposed to those replacing an existing policy—to suggest the figures could be overblown as a measure of success.

Democrats up for re-election in the fall have been bracing for a renewed debate around the law as the Senate prepares to hold confirmation hearings for a successor to Health and Human Services Secretary Kathleen Sebelius, whose resignation was announced last week.

Rep. Carol Shea-Porter (D., N.H.), who has come under strong criticism from Republicans for supporting the law and is in a tough race for re-election, called the development great news. She has made her frustrations with the law known to the Obama administration, but she said Thursday she has also heard from constituents in both parties who have been helped by the law. “The Affordable Care Act still has challenges, but today’s news is clearly a giant step forward,” she said in a statement.

Polls regularly show that while opinion remains sharply divided over the law and more people dislike it than like it, a majority of Americans don’t want it repealed. The White House has seized on that finding, and on Thursday Mr. Obama also suggested that the final enrollment numbers could provide Democrats with some measure of political cover amid a likely barrage of election-year attacks.

“If Republicans want to spend all their time talking about repealing a law that’s working, that’s their business,” Mr. Obama said. “I think what Democrats should do is not be defensive, but we need to move on and focus on the things that are really important to the American people right now.”

GOP lawmakers continued to emphasize information not contained in the numbers, including how many people have paid their first month’s premium, the final step in enrolling for insurance.

“How many of those who have signed up were among the millions who had their plans canceled? How many were already insured but forced to sign up for an Obamacare plan?” said Sen. Lamar Alexander (R., Tenn.). “This law promised to insure the uninsured, let those who liked their insurance keep it, and lower the cost of insurance—let’s talk about what the law was supposed to do instead of how many millions of people the president has so far forced into Obamacare.”

The new total reflects people who had signed up through April 15 through the federal and state exchanges, the last date on which most Americans were allowed to finish applications. The official enrollment deadline had been March 31, but the federal exchanges gave people who tried to sign up but got stuck in long lines or computer overloads an additional 15 days to finish their applications. Most states offered similar extensions.

Bringing the uninsured into the health system was a key promise in Mr. Obama’s push for the law. Federal officials said earlier that only insurers know how many people have paid their first month’s premium, and that they aren’t collecting information on what proportion of enrollees had been uninsured.

The president’s announcement didn’t include state-by-state information about enrollment, which will be key to determining premiums for 2015 and beyond since each state’s insurance market is different and rates are based on the makeup of people who sign up within each.

White House officials said Thursday that 28% of the enrollees in the federally run exchanges serving 36 states are in the 18-34 demographic. Some 7% are children covered by family plans. The administration didn’t release demographic information for the 14 states running their own exchanges.

Insurance officials previously said 80% to 85% of enrollees paid the first month’s premium, a proportion that would suggest the administration will ultimately hit enrollment targets for the exchanges for 2014 even if some people drop out or have picked more than one plan and are overrepresented in the numbers, especially since some people who have a change in their life circumstances such as a divorce or job loss are still allowed to sign up after March 31.

The figures represent a slight increase in young people compared with the previous five months. The administration said earlier that through Feb. 28, about 4.2 million people were covered by plans picked via the federal and state-run exchanges. Of those, 25% were 18 to 34, and 6% were children covered by family plans.

The mix of younger people buying coverage is considered by health plans to be crucial in determining future insurance prices. Under the law, insurers no longer can charge premiums based on health histories, and are restricted in how much more they can charge older consumers.

Mr. Obama offered a muted warning about premiums next year, saying he expected them to rise, though he also said they had done so before the law was passed because of the increase in health costs.

The president also criticized states that opted not to expand their Medicaid programs to include all adults making around the poverty line, a decision made available to them after the Supreme Court ruled in June 2012 that they couldn’t be required to participate in that part of the health law.

Governors and legislators in 24 states, most of whom are Republicans, say they don’t believe state budgets or Washington can withstand the additional costs of expanding Medicaid.

Mr. Obama on Thursday characterized the decision as one motivated by “political spite.”

“That’s wrong. It should stop,” he said. “Those folks should be able to get health insurance like everybody else.

*Modified from a WSJ.com article

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