Archive | Health Care Bill Impact on Business

Look out below! Work more, get less in Obamacare ‘cliff’

Be careful you don’t fall off the Obamacare “cliff” when the boss asks you to put in some overtime. Working more could ultimately mean thousands of dollars less for you under a quirk in the new health-care law going into effect this fall. This could prompt some people to cut back on their hours to avoid losing money.

  • “Working more can actually leave you worse off,” “It’s sort of an absurd scenario,” said Jonathan Wu, ValuePenguin.com’s co-founder. “It’s something for people to be aware of.”
  • In that scenario, an individual or family whose annual income surpasses maximums set by the federal government—if only by $1—will totally lose subsidies available to buy health insurance under the Affordable Care Act. The loss of those subsidies in some cases will mean that people potentially would have been better off financially if they had worked less during the year, Wu said. And they then would have to work significantly more to make up for the lost subsidy.
  • “I think they’d be surprised to see how drastic it is,” said Wu. “I’d be kind of shocked to see if I make $100 less (in total income each year), I get all these benefits, but if I make $100 more, I get nothing.” “You basically don’t want to fall in that hole,” said Wu, adding that he believed contractors and others with more control over their incomes would be apt to adjust their hours worked to avoid the subsidy cliff.

Under the ACA, federal subsidies in the form of tax credits to buy insurance on new state health insurance exchanges will be available to millions of people who can start enrolling on those exchanges Oct. 1. The subsidies are available to people or families whose incomes total 400 percent above the federal poverty level or less, and are designed to cap their insurance premiums at 9.5 percent of their total income.

Doing the math

  • For a single person, that FPL income maximum is $45,960 per year. The maximums are adjusted upward for couples and families until maxing out at $94,200 for a family of four. Under a scenario that ValuePenguin.com identified, a couple in Ohio, both age 50, would be eligible for subsidies worth $3,452 to purchase a so-called silver insurance plan—a moderately priced level of benefits under the ACA’s scheme—that costs $9,346 annually if they made up to $62,040 per year.
  • But if they made just $1 more than that, they would lose the subsidy. Wu noted that the couple then would have to earn at least $65,492 to make up for the lost subsidy.

In New York, a family of three whose annual income totals $78,120, would pay $12,784 for the second-lower-priced silver plan on that state’s insurance exchange. After getting a $5,363 tax credit, the family’s net cost for the insurance would be $7,421. But if the family earned even slightly more than $78,120, they would have to pay the entire $12,784 for the insurance because they then wouldn’t qualify for the subsidy. To make up for that, the family’s annual income would have to reach $83,483, Wu said.

*Modified from a CNBC.com article

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Doctors are skeptical and confused about Obamacare, survey finds

A new survey shows that an overwhelming percentage of physicians don’t believe that their states’ new health insurance exchanges will meet the Oct. 1 deadline for those key Obamacare marketplaces to begin enrolling the uninsured. Just 11 percent of doctors believe those exchanges will be open for business that day.

  • But those doctors, by a wide margin, also said they are “not at all familiar” with how a number of important aspects of those exchanges and plans offered on them will work—aspects that will directly affect their bottom lines. More than 65 percent of them gave that answer to all but one of the questions asking their familiarity with plan benefits levels, contracted rates with insurers, patient coverage terms and the claims process.

Shane Jackson, president and COO of LocumTenens.com, which conducted the survey, said the results are potential red flags for not only the finances of those physicians’ offices, but also for their patients, who “rely on their doctor for a lot of information.” “They expect to a large degree that their doctors understand how this is all going to work,” said Jackson, whose company is a full-service physician staffing agency and online industry job board.

Noting that an important goal of the Affordable Care Act is enrolling the uninsured in insurance plans—which will theoretically put more money in doctors’ pockets—Jackson said, “As major stakeholders and advocates in this effort, physicians should be educated about how these changes will impact them, their patients and their prospective patients.” “Our survey shows that for the most part, they are in the dark,” Jackson said. “Doctors, they’re seeing patients and they don’t have time or motivation to get up to speed on this, but they’re going to have to because it’s going to impact them.”

Doubts about exchanges

Those doctors, on average, believe they will see a 13.4 percent increase in the number of patients coming to their practices after the state health exchanges go into effect. Those exchanges, a pillar of President Barack Obama’s healthcare reform law, are being set up to enroll uninsured people, many of whom will receive government subsidies to purchase insurance from companies that choose to sell plans through the marketplaces.

  • But more than 55 percent of the doctors don’t expect the exchanges to begin enrollment as scheduled this fall, and 34 percent don’t know if the enrollment will begin on time—a degree of skepticism that tracks overall cool or negative public opinion about Obamacare. Jackson said he was “amazed” that just 11 percent of doctors were “saying their exchanges would be ready.”

A huge number of doctors—89 percent—said they believed that consumers had not been adequately educated about how the exchanges’ policies will function, and more than 9 percent didn’t know if there had been adequate education of consumers. Just 1.6 percent believed consumers had been adequately educated about the exchange’s policies.

  • More than 56 percent of doctors said they were “not at all familiar” with how insurance policies purchased on the exchanges will affect their business, and another 21 percent were only “slightly familiar.”

That question was the only one in which the level of utter lack of familiarity among doctors about aspects of the exchanges was even close to 50 percent. The other questions showed significantly higher levels of ignorance. More than 67 percent were totally unaware of the coverage terms for patients, including cancellation and grace periods.

Nasty surprises

  • Jackson said that doctors who don’t have an understanding of those coverage terms could be in for a nasty surprise once the new plans go into effect.That’s because under the rules of the exchange, a patient can go up to three months without paying premiums and still not get their coverage formally dropped by an insurers—but the insurer isn’t obligated to pay claims incurred during the second and third month if that person isn’t paying their premiums for that time, Jackson said.
  • Those rules could mean that doctors end up eating the cost of the care they have already provided, or have their receivables stay unpaid for longer stretches of time. “Just from a business perspective for doctors and practices, that’s a huge thing they need to get their arms around,” Jackson said. His survey found just 5.2 percent of doctors were either “extremely familiar” or “very familiar” with patient coverage terms.
  • An even a greater number of doctors, 70.5 percent, don’t have any idea on how the claims process will work. And nearly 66 percent were completely unfamiliar with what the contracted rates with payers in the exchanges will be.

“I think it’s logical to say that they’re not necessarily seeking out all of the relevant information,” Jackson said of the large percentage of doctors unfamiliar with many aspects of the exchanges.

*Modified from a CNBC.com article

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Union Fears ‘Destructive Consequences’ From Obamacare

The laborers union has added to organized labor’s drumbeat of dissatisfaction with the Affordable Care Act.

  • In a letter sent to President Barack  Obama on Thursday, Laborers International Union of North America President Terry O’Sullivan wrote that the law has “destructive consequences” for the types of health plans that cover millions of unionized construction workers and their family members.
  • The letter follows a separate one written last week by the heads of the International Brotherhood of Teamsters, the United Food and Commercial Workers and Unite Here, expressing similar concerns to Congress’s top Democrats, Sen. Harry Reid and Rep. Nancy Pelosi. The International Brotherhood of Electrical Workers took out print ads raising alarms about the law last week as well.
  • Mr. O’Sullivan zeroed in on some factors that could directly impact unionized construction workers who are typically covered by multiemployer plans. He noted that costs are rising for such plans because of the law’s benefit mandates. Moreover, a tax under the law would cost such health plans $63 per covered individual, or $630,000 for a plan covering 10,000 people, he wrote. The proceeds of the tax will be used to subsidize insurance companies offering health plans in the Health Exchanges.
  •  “In effect, ACA takes money from the pockets of each laborer covered by a health and welfare fund and gives it to for-profit insurance companies,” Mr. O’Sullivan wrote. Those added costs will eventually impact collective bargaining agreements, he said, making union construction companies less competitive than nonunion ones and resulting in less work for union laborers. For those impacted, a great resource for CSCS Card Mock Tests is needed. The unions need to be strong to surpass such hurdles in these demanding times.
  • Mr. O’Sullivan concluded: “Approximately 3 million laborers, retirees, and their families now face the very real prospect of losing their health benefits. This, I must remind you, was something that you promised would not happen.”

The laborers union, with about 570,000 members, is one of a few major unions that didn’t support enactment of Affordable Care Act, Mr. O’Sullivan reminded Mr. Obama. “Now, we have watched as the implementation of the law has progressed, our fears have become reality,” he wrote.

*Modified from a WSJ.com article

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Price, Price, Price: Health-Insurance Shoppers Have Priorities

The federal health overhaul’s big requirement that most people carry health insurance is still months away, but already insurers like Blue Cross & Blue Shield have a sense of what will matter most to consumers: price.

  • “To me, it’s all about money,” said Rob Roy, who compared plans in a consumer test for the insurer. Currently uninsured and working as a cook in a pub, Mr. Roy said he found the choices too expensive. He ended up opting for a competitor’s plan instead of Blue Cross.

To figure out who’s going to show up for the new marketplaces and what they want, companies have plunged into research. They have been setting up simulated exchanges for consumers to test-drive. WellPoint Inc., the insurer that may end up with the biggest presence on the exchanges nationally, has put about 55,000 people through these faux exchanges.

“You’re going to try to have a population of individuals who have never purchased this product,” said Raymond Smithberger, who oversees individual health plans at Cigna Corp. “It’s like buying a brand-new car if you’ve never driven before.” Cigna used the online simulations to help decide which state exchanges it would join, and to shape some elements of its coverage design.

  • Simulations by firms like Stonegate Advisors LLC, which conducted the insurer’s test-drive, have found that consumers often choose plans fairly quickly, without always looking in-depth at the benefit details. People with more health problems wanted richer coverage so they wouldn’t have to pay much to go to the hospital or doctor’s office.
  • Still, the focus on price, including the effect of subsidies, is a constant. Consulting firm Booz & Co.’s pretend exchanges showed that premiums were the most important factor in plan selection, followed by cost-sharing features like deductibles. McKinsey & Co., which tested about 150,000 consumers, found most would opt for smaller arrays of doctors and hospitals to achieve discounts.
  • “People were willing to trade off network access for price,” said Shubham Singhal, a McKinsey director who leads the firm’s health-care practice.
  • Blue Cross found the monthly premium was the most important thing for 48% of people, and one of the most important things for another 26%. It dwarfed other factors like prescription-drug coverage and copayments for doctor visits.
  • Blue Cross sponsored the simulated exchange last fall to get “a real-life glimpse into how people will behave,” said Jim Gallagher, the insurer’s vice president of marketing. The company tested around 500 people, but it struggled to enlist Hispanics, a key demographic; only four completed a Spanish-language version of the simulation.
  • On average, people spent just nine minutes on the process. And less than a third tried to access the definitions of key terms like “deductible.” That may raise concerns that they didn’t fully understand details of the plans, and insurers will need to help educate them, said Marc Pierce, president of Stonegate Advisors.
  • “I found it very difficult to compare the different options,” said Elise Loftis, who said she would want to seek advice from an agent. She wanted to know what the plans would cover in hospital costs. Her husband has had his hips replaced, which resulted in an infection and a second hospital stay, and the couple has a 3-year-old son. She chose a Blue Cross plan in the test.
  • The research is shaping Blue Cross’s decisions. The company is initially selling a “tiered” plan that requires consumers to pay more to see certain health-care providers, and next year it will roll out a new design with a smaller network, both approaches that can hold costs down.
  • As in the real exchanges, people had to enter income information to learn what federal subsidy they might get. Then they were shown tiers of plans, ranked as bronze through platinum, with platinum the richest and most expensive. They could also choose from three different insurers, and click to figure out details like deductibles.
  • Forty-one percent of the consumers said they would sacrifice a broad choice of doctors and hospitals in order to save money, even if their own doctor might not be in the plan’s network. Overall, Blue Cross plans were chosen by nearly 60%.
  • The insurer also isn’t offering any platinum plans to consumers, partly because the simulation showed they tended to draw people with significant health needs, a particular concern if it’s the only competitor with a platinum product.

A new, broad Blue Cross marketing campaign boasts of features it hopes will be inviting to consumers, like doctor ratings. Another ad focuses on the idea that consumers can get a refund the following year if they don’t use enough services to get through their deductibles—a design that tends to reward healthier people as well as encourage people to stick with Blue Cross.

*Modified from a WSJ.com article

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Why The White House Is Panicking About ObamaCare

Actors. Actresses. NFL football players. Baseball players. Librarians. Mayors. City councilmen. Members of AARP. The Obama administration is looking far and wide, leaving no stone unturned in a relentless search for…well…for help. Help with what? Help with getting people to enroll in health insurance plans this fall. And why is that?

Because the administration is facing the very real possibility that its signature piece of legislation may fall flat on its face.

  • Last week’s announcement that the employer mandate will be delayed for a year and that income verification for people getting subsidies will also be delayed are the latest signs of trouble. The next shoe to drop may be the failure for people to obtain (ObamaCare) insurance — even if it’s free or highly subsidized.

Consider this:

  • About one in every four individuals who are eligible for Medicaid in this country has not bothered to enroll.
  • About one in five employees who are offered employer-provided health insurance turns it down; among workers under 30 years of age, the refusal rate is almost one in three.
  • Millions of people are turning down (Medicaid) health insurance, even though it’s free! Millions of others are turning down their employers’ offers. Since employees pay about 27% of the cost of their health insurance, on the average, millions of workers are passing up the opportunity to buy health insurance for 27 cents on the dollar.
  • You almost never read statistics like these in the mainstream media. Why? Because they completely undermine health policy orthodoxy: the belief that health insurance (even Medicaid) is economically very valuable, that it improves health and saves lives, and that the main reason why people don’t have it is that they can’t afford it.

Welcome to the huge disconnect in health reform. On the one hand there are the people who are supposed to benefit from health reform. On the other hand there are the people who talk about it and write about it. I think it’s fair to say these two groups almost never meet.

Study after study has purported to have found that health insurance improves health, saves lives, makes people happier, etc., etc. But these studies almost always ignore two cardinal facts:

  • We have made it increasingly easy in this country for the uninsured to obtain health care after they get sick. We have also made it increasingly easy for people to get health insurance after they get sick. Both developments reduce the incentive to spend time and money enrolling in a health plan.

I have described before the experience of emergency room care in Dallas:

“At Parkland Memorial Hospital both uninsured and Medicaid patients enter the same emergency room door and see the same doctors. The hospital rooms are the same, the beds are the same and the care is the same. As a result, patients have no reason to fill out the lengthy forms and answer the intrusive questions that Medicaid enrollment so often requires. At Children’s Medical Center, next door to Parkland, a similar exercise takes place. Medicaid, CHIP and uninsured children all enter the same emergency room door; they all see the same doctors and receive the same care.

Interestingly, at both institutions, paid staffers make a heroic effort to enroll people in public programs ― working patient by patient, family by family right there in the emergency room. Yet they apparently fail more than half the time! After patients are admitted, staffers go from room to room, continuing with this bureaucratic exercise. But even among those in hospital beds, the failure-to-enroll rate is significant.

Clearly, Medicaid enrollment is important to hospital administrators. It determines how they get paid. Enrollment may also be important to different sets of taxpayers. It means federal taxpayers pay more and Dallas County taxpayers pay less. But aside from the administrative, accounting and financial issues, is there any social reason we should care?

Economics teaches that people reveal these preferences through their actions. If people act as though they are indifferent between being uninsured and being on Medicaid, we may infer ― based on this behavior ― they are equally well off in both states of the world from their own point of view.”

Against this conclusion, advocates of “behavioral economics” might argue that people don’t know what’s best for them. They have to be “nudged.” Seeing a football star on TV encouraging young men to enroll in a health plan might do the trick. But for the Obama administration that doesn’t solve the problem. People need more than an initial nudge. They have to be nudged every month.

Take Massachusetts. That state cut its uninsurance rate in half. But the main vehicle was Section 125 plans set up by employers. These accounts allow employees to pay their share of the premiums with pre-tax dollars and they are mandatory. Further, for lower-income employees the insurance is highly subsidized by the state. More to the point, under this arrangement, the employee’s contribution is automatically deducted every pay period.

  • Under ObamaCare, similarly situated individuals are going to be expected to pay a monthly premium the way they pay their utility bills. But with this difference. When people don’t pay their electricity bills, the utility cuts off their electricity. When they don’t play their rent, the landlord throws them out in the street. But when they don’t pay their health insurance premium, what happens then? Not much.
  • Why is it so important to the administration to have people enroll? If they don’t enroll in Medicaid, I don’t think it matters very much. But if they don’t enroll in private plans sold in health insurance exchanges, it will matter a great deal. Remember, these will be artificial markets in which insurance will be underpriced to the sick and overpriced to the healthy. A lengthy, complicated enrollment process will further discourage those with no health problems.
  • But if the only people who enroll are those who are sick, the average premium will go through the roof. A death spiral will ensue as ever increasing premiums price more and more buyers out of the market, leaving only those whose expected medical expenses exceed those high premiums.

The bright side of all this is a possible teaching moment. The whole nation may be treated to one vast demonstration of why prices matter.

*Modified from a Forbes article

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Another union decries Obamacare’s impact on members’ healthcare coverage

Another union is crying foul over what it says is Obamacare’s negative impact on its members’ current healthcare coverage under multi-employer plans.

“If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what,” the International Brotherhood of Electrical Workers (IBEW) quotes a speech President Obama delivered on July 16, 2009 in new ads running in Roll Call and The Hill.

  • According to the union, the multi-employer plans IBEW has used for over 65 years to provide coverage for their members are at risk, thanks to what it terms “loopholes in the Affordable Care Act.”
  • “The ACA threatens the viability of multi-employer health plans in four ways: 1) the high employee threshold of the employer mandate 2) the re-insurance fee, 3) the definition of qualified health plans, and 4) the lack of multi-employer specific administrative guidance. We believe it may be impossible to reverse the damage done to these plans if these issues are not resolved.

The IBEW cannot afford to sit on the sidelines at the ACA threatens to harm our members by dismantling multi-employer plans,” the IBEW explains in a statement released Thursday.

The union estimates Obamacare could negatively affect the multi-employer health plans of some 26 million Americans. According to IBEW president Edwin D. Hill, however, the union remains a supporter of Obamacare’s mission — but the administration must make concessions for these plans.

“[Our] members and allied employers have worked hard for the healthcare they have, and President Obama must move now to guarantee that his signature law will not cost them their coverage,” Hill said in a statement.

IBEW is the latest union to voice concern about the coming impact of Obamacare implementation on their membership.

  • In recent months unions like the United Food and Commercial Workers International Union, The International Brotherhood of Teamsters and UNITE HERE have all been looking for alterations to the law.

UFCW president Joseph Hansen called on Obama in May to help his members keep their original coverage by extending tax subsidies to the plans.

“The ACA offers a subsidy to lower-income individuals and families so they can afford to purchase this insurance. As many of our members fall into this category, we believe the subsidy can and should apply to nonprofit plans. All we want is equality — where our plans are treated the same as for-profit insurers,” Hansen wrote in an op-ed at The Hill.

  • In April, United Union of Roofers, Waterproofers and Allied Workers called for “for repeal or complete reform of the Affordable Care Act” in order to protect such plans.
  • “For decades, our multi-employer health and welfare plans have provided the necessary medical coverage for our members and their families to protect them in times of illness and medical needs. This collaboration between labor and management has been a model of success that should be emulated rather than ignored. I refuse to remain silent, or idly watch as the ACA destroys those protections,” United Union of Roofers, Waterproofers and Allied Workers president Kinsey M. Robinson said in a statement.

*Modified from a DailyCaller.com article

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Delay in Obamacare – what you need to know

The Obamacare employer mandate has been delayed by a year to 2015, meaning that many businesses can push back providing worker health insurance a bit longer. That changed on Tuesday. In a blog post, the U.S. Treasury Department explained that the government needs time to simplify reporting requirements, and businesses need breathing room to adapt to the changes.

Here’s what businesses and workers need to know.

Who’s affected?

A relatively small share of the country’s businesses fall under Obamacare’s employer rules, and most of those that do already provide insurance. That might sound surprising, because the biggest Obamacare myth spouted by opponents is that it will crush small business. The vast majority of the nation’s businesses, 97% of them, are too small to be affected.

What’s more, most larger employers already provide insurance anyway. Of the nation’s 6.5 million workplaces, only about 70,000 — a little more than 1% — must actually start providing insurance.

Then why does this matter?

The mandate affects most of the nation’s workers. According to the latest Census data, close to 80 million people work at firms that must provide insurance. Though most of them are offered insurance, that still leaves millions who will have to wait another year.

Has the mandate already affected businesses?

It has impacted those businesses that intend to dodge Obamacare by cutting worker hours. The employer mandate kicks in at 50 full-timers, and the law counts anyone who works at least 30 hours a week as full-time.

  • That’s given rise to the “29ers” phenomenon, in which business owners reduce workers’ hours from full-time to 29 hours per week. This has been especially prevalent in the franchising and restaurant industries, where shift hours are frequently swapped.

There’s no telling whether the mandate has already impacted hiring, though. Mark Zandi, chief economist at Moody’s Analytics, said hiring data has yet to show significant changes as a result of Obamacare.

What about the rest of Obamacare?

The Treasury said the latest change doesn’t affect the individual mandate, which requires that most taxpayers buy insurance or pay a government fine. In similar fashion, Treasury said the timeline hasn’t changed for the implementation of individual and small business exchanges — separate marketplaces where people and business owners can shop for insurance at the state level.

But there are doubts.

As originally planned, only those who don’t receive affordable coverage at work can receive federal subsidies while shopping for insurance on the individual exchanges. But now that employers don’t have to abide by Obamacare reporting requirements, which means the government will have no way to verify whether someone is incorrectly getting subsidies.

*Modified from a CNNMoney.com article

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For Fatburger and others, Obamacare delay came too late

Delaying the Obamacare employer mandate has simply put off rules business had already started adjusting to. Under the Affordable Care Act, companies with 50-plus full-time employees must start offering them health insurance or face stiff penalties. The employer mandate had been set to kick in January 2014, but was pushed back a year.

  • Many companies at the International Franchise Expo in New York City last month acknowledged they’ve been adopting that slash-and-share method, cutting hours and splitting workers.
  • The employer mandate remains unpopular with most small business owners. Although it applies to only 3% of the nation’s 5.7 million employers, the vast majority of whom already provide insurance, the rule is seen as burdensome and confusing.
  • Because a 30-hour work week counts as full-time under Obamacare, Fatburger fast-food restaurants had started cutting worker hours below that threshold, CEO Andy Wiederhorn said. Some Fatburger owners even began “job sharing” with other businesses, teaming up to share a higher number of employees all working fewer hours. Someone could work 25 hours at one Fatburger, 25 at another one with a different franchise owner, and still not be a full-time worker under Obamacare rules.

For them, the White House decision to delay implementation doesn’t change much: Small business owners who undo those changes will simply have to redo them next year.

“All it’s doing is causing confusion, anxiety and the workers are paying the price,” Wiederhorn said. “Now, the mandate’s a moving target. It’s very, very challenging.” At Wiederhorn’s second company, Buffalo’s Cafe chicken wing restaurants, he had already given up $30,000 as a result of the employer mandate.

  • One owner of several Buffalo’s Cafe franchises in Georgia planned to close one of his restaurants to get below the 50-employee mark. In response, Wiederhorn reduced the royalty fee his corporation charges franchisees.

Wiederhorn could have waited a year before making the move. “I’m definitely getting the short end of the stick,” he said. “We gave them the concession to save the jobs. And now the law’s been delayed. We feel like we have whiplash here.”

  • Mike Johnson is another Buffalo’s Cafe franchisee who owns four restaurants near Atlanta, Ga. He has no plans to reduce workers’ hours to avoid the mandate. Those covered under his insurance plan will jump from 12 employees to perhaps 70.
  • Even if some of them turn down the offer, he projects his yearly health insurance premiums will go from $60,000 to more than $200,000. That would cut his profits in half, he said.

“I’ve been worried nearly sick about it,” Johnson said. “This gives me another year to look at all the options, and lets the politicians talk about what the best course of action would be.”

Johnson hopes that includes a repeal of the employer mandate. He argues that health care reform will be sufficient enough with the other provisions.

“The employer mandate never made any sense to anybody, especially to struggling small businesses,” he said

*Modified from a CNNMoney.com article

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Obamacare Delay That Boosts Business Concerns Workers

While businesses hailed President Barack Obama’s decision to delay penalizing companies that fail to offer benefits under the health law, workers and states may struggle with the uncertain aftermath.

  • In postponing the mandate for a year, the president has lessened the need for employers to provide coverage or improve on skimpy benefits, and opened questions about who may be eligible for U.S. subsidies being offered in the online insurance exchanges now being created under the law.

For employers, “this is relieving, temporarily, a burden,” said Joseph Antos, a health economist at the nonprofit American Enterprise Institute in Washington. “The usual question is, well, who is harmed?”

The administration, in a blog post July 2, said it would release guidelines next week that it hoped would clarify enforcement of the Affordable Care Act rule going forward.

The delay was welcomed by economists, who saw uncertainty over the law as a drag on hiring.

“I see this as a reason to take a pretty big sigh of relief for the near-term economic outlook,” said Stephen Stanley, chief economist at Stamford, Connecticut-based Pierpont Securities LLC. “There were a lot of firms that probably were just not doing anything because they had no clarity on what labor costs were going to be next year.”

30 Hours

Under the provision, companies with 50 or more workers face a fine of as much as $3,000 per employee if they don’t offer affordable insurance. The rule covers those working 30 hours a week or more. Valerie Jarrett, a senior Obama adviser, said in a blog post announcing the move that the administration decided on the delay so officials could simplify reporting requirements.

While surveys suggested the mandate wasn’t deterring most businesses, the administration has faced a steady stream of reports about employers limiting hours or holding off on hiring. Employees at Darden Restaurants Inc (DRI)., owner of the Olive Garden and Red Lobster chains, who work fewer than 30 hours a week will be considered part time and won’t be offered insurance, Bob McAdam, the company’s senior vice president of government and community affairs, said in a phone interview. The company expects about 75 percent of its workforce to remain part time, he said.

The one-year postponement “could help boost payroll growth,” Maury Harris, a New York-based economist at UBS, said in a research note to clients. “For those employers on the cusp of the 50-employee threshold, this delay may prompt them to hire as they may be unwilling to continue to postpone hiring” to avoid offering benefits.

Payroll Growth

U.S. payrolls have been growing this year, with the economy adding 175,000 jobs in May and 149,000 in April, according to the Labor Department. The unemployment rate climbed 1/10th of a percentage point last month to 7.6 percent as more Americans entered the workforce. The government will report job growth for June on July 5.

Still, the delay may do little for hiring, said Amanda Austin, director of federal policy for the National Federation of Independent Business, a Washington trade group that calls itself “the voice of small business” in the U.S.

“Businesses like to plan for more than a year out,” she said in a telephone interview. “If they were looking at a plan to put in place for this, they will probably continue on with it. Just one year is not going to provide substantial relief.”

The downside could come for Americans lacking insurance coverage, said Rich Umbdenstock, president of the Chicago-based American Hospitals Association.

‘Shared Responsibility’

“The goal of the ACA was to extend coverage to the uninsured, which required a shared responsibility from all stakeholders,” he said in a statement. “We are concerned that the delay further erodes the coverage that was envisioned.”

Without the penalties, the U.S. government may lose as much as $10 billion in revenue next year, the amount expected to be generated according to congressional estimates.

The White House suggested the impact of the decision would be limited. Ninety-eight percent of workers in firms with 50 or more employees worked for a company that offered health coverage to at least some of its employees in 2012, according to the Kaiser Family Foundation’s Employer Health Benefits Survey.

In March, meanwhile, a survey of large employers found 84 percent said they were unlikely to cut part-timers’ hours to avoid the mandate, according to Towers Watson & Co (TW)., the New York-based benefits adviser that conducted the research. Small employers were a different matter: An April poll by Gallup found 41 percent said they had backed off on hiring due to the law and 18 percent said they would have to cut workers’ hours.

Existing Requirements

Other requirements for businesses will remain in effect, said J.D. Piro, leader of the health-law group at benefits consultant Aon Hewitt, in a telephone interview.

Companies still must offer insurance to their workers’ children until age 26, and they must pay a minimum of 60 percent of medical bills and provide preventive health services, including birth control, without cost-sharing by employees, Piro said. Those provisions carry $100 daily fines per violation.

The delay “only applies to the employer mandate,” Piro said. “It doesn’t apply to any other part of the act.”

The individual mandate, a linchpin of the law that requires most Americans to carry health insurance, also remains in effect. So, too, will the online insurance exchanges, which are expected to sell subsidized health plans to some 7 million people next year.

More Difficult

While the Obama administration said the exchanges were on track to open for enrollment at the law’s Oct. 1 deadline, the delay promises to complicate their operations, said Kevin Counihan, executive director of the state of Connecticut’s exchange, in a telephone interview.

Government subsidies for uninsured people who buy coverage through the exchanges are supposed to be available only for those not offered affordable health insurance on the job. The markets will now have to figure out how to verify eligibility without employers reporting their benefits, Counihan said.

The government could demand subsidies back from consumers when they file tax returns in 2015, although that might produce a political “horror show,” he said.

Counihan said he was waiting to see what the administration proposes in follow-up regulations.

“There’s going to clearly be confusion about this,” he said. “There’s going to be a percentage of the population that also thinks that the whole thing has been delayed by a year.”

*Modified from an Insurancebroadcasting.com article

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ObamaCare employer mandate delayed until after 2014 midterms

The ObamaCare employer mandate requiring businesses to provide their workers with health insurance will be delayed by a year, the administration said Tuesday in a stunning announcement.

  • Delaying the requirement until 2015 is an enormous victory for businesses that had lobbied against the healthcare law. It also means that one of healthcare reform’s central requirements will be implemented after the 2014 midterm elections, when the GOP is likely to use the Affordable Care Act as a vehicle to attack vulnerable Democrats.
  • Many employers had threatened to cut employees’ hours to avoid the new requirements. Employers had also complained about the mandate’s reporting provision. Rules on the requirement came out this year, leaving little time for businesses to respond and prepare.

In a White House blog post, senior adviser Valerie Jarrett wrote that the administration believed it needed to give employers “more time to comply with the new rules.”

“This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers,” Jarrett wrote Tuesday evening.

Jarrett also wrote that the delay would help in “cutting red tape and simplifying the reporting process.”

“We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination,” Jarrett said. “So we plan to re-vamp and simplify the reporting process.”

The Treasury Department’s announcement does not affect the individual mandate, which requires most taxpayers to either purchase insurance or pay a penalty, and administration officials said on Tuesday that other aspects of the law wouldn’t be delayed.

The law’s critics quickly framed that as a double standard, accusing the administration of acknowledging the law’s complexity for businesses without offering a similar break to the individual workers who still have to buy insurance. The employer mandate affected businesses with more than 50 workers.

“That the Obama administration is putting off this job-killing requirement on employers, but not individuals and families, shows how deeply flawed the president’s signature domestic policy achievement is,” said Sen. Orrin Hatch (Utah), the ranking Republican on the Senate Finance Committee.

“While a delay of this mandate is welcome news since it shows the challenges the employers are facing complying with it, a delay — conveniently past the 2014 election — only adds to the uncertainty these job creators face because of ObamaCare,” Hatch said.

Other Republicans seized on the news, arguing that the delays suggested the law was a “train wreck” and that Democratic candidates in 2014 would have difficulty explaining the delay.

Speaker John Boehner (R-Ohio) and House Majority Leader Eric Cantor (R-Va.) renewed their calls for repealing the law in full.

“This further confirms that even the proponents of ObamaCare know it will hurt jobs, decrease economic growth and make it harder for families to have access to quality and affordable health care,” Cantor said in statement.

“Rather than continuing to delay the predictable pain until another Election Day has passed, we should scrap this entire law and instead implement patient-centered reforms before any more damage is done,” he said.

Some Democrats had openly fretted about the law’s implementation.

While GOP leaders were quick to react, hammering the delay as evidence that the law is unworkable, Democratic leaders were quieter Tuesday evening. One exception was Democratic National Committee Chairwoman Debbie Wasserman Schultz (Fla.), who tweeted that the decision shows Obama is “in it for long haul to fully implement” the healthcare law.

Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid (D-Nev.) said the administration was showing “a willingness to be flexible.”

“It is better to do this right than fast,” said Jentleson in a statement.

Sen. Max Baucus (D-Mont.), one of the primary architects of the healthcare law, warned in April that small businesses were struggling to come to grips with their new responsibilities.

“Small businesses have no idea what to do, what to expect,” Baucus told Health and Human Services Secretary Kathleen Sebelius at a hearing.

“I just see a huge train wreck coming down,” Baucus said.

The U.S. Chamber of Commerce praised the delay.

“The administration has finally recognized the obvious: Employers need more time and clarification of the rules of the road before implementing the employer mandate,” said Randy Johnson, the Chamber’s senior vice president for labor, immigration, and employee benefits.

“The Chamber has testified numerous times about the problems with the mandate, and we applaud the administration’s step to delay this provision. We will continue to work to alleviate this and other problems with ObamaCare.”

“I hope that this means that employers who have been cutting employees to part-time will now call them back to full-time employment, but regret that the administration is delaying the implementation of an important provision of the ACA,” said Timothy Jost, a law professor at Washington and Lee University and a strong supporter of the healthcare law.

The change will likely mean that more people buy individual coverage through the law’s new insurance exchanges, which are supposed to be open for enrollment by Oct. 1.

If fewer employees have access to coverage through work, at least some are likely to turn to the exchanges for coverage and the tax credit that helps cover the cost.

Hatch said he hoped that was not the administration’s goal, stating it could be a “back door attempt at getting more Americans into the exchanges, which have been plagued by problems.”

More people on the exchanges would also mean greater federal spending on the tax subsidies, increasing the law’s total cost.

Sabrina Corlette, a health policy expert at Georgetown University, said the move could be a boon to consumers because plans on the exchanges will be stronger than those offered by many employers. She worried, however, that the employer mandate could be deferred again down the line.

“Anyone that’s been around politics long enough knows to be a little bit concerned,” Corlette said. “If a one-year delay is OK, how about a two-year delay? How about a three-year delay?”

The political effects of the delay could be more severe than the effect on the law’s expansion of healthcare coverage. One vulnerable Democrat, Sen. Mark Begich (Alaska), hailed the decision.

“I’m pleased the administration is listening to me and the many businesses that are concerned about the complexity of the new requirements,” said Begich, who is facing reelection in 2014.

In its most recent estimates before the delay was announced, the Congressional Budget Office said the number of people with employer-based coverage was not expected to change next year.

The penalty for employers that failed to offer coverage was also not expected to bring in any money next year, according to the CBO’s latest estimates.

The delay gives employers a free year to dump their workers into the law’s insurance exchanges, former Congressional Budget Office director Douglas Holtz-Eakin said.

“Essentially for calendar 2014, the act of dropping coverage and dumping employees into the exchanges is on sale,” he said. “Drop and dump, but no penalty.”

*Modified from a Hill.com article

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