As usual, this discussion about healthcare reform starts from a partisan posture, with, on the one side, a healthcare expert from a left-leaning publication putting a positive spin on the news, and a healthcare expert from a right-leaning think tank spinning negative. So if everything you read out there is just political partisans trying to score points for their side, what’s the straight story?

Of course, the straight story is nuanced and somewhat complicated, as they often are. The truth is, looking at these two stories, that both analysts are right. They’ve just chosen different facts to be right about.

Fact #1: Currently, young, healthy individuals who opt to buy individual health insurance will get low rates, because health insurance companies will only accept the healthiest people at their lowest rates. So when looking at the lowest that a theoretical person could pay, individual rates are always way lower than small group rates, because in a group plan, insurers have to take on employees with chronic illnesses and those at risk of severe disease with costly treatments.

Fact #2: Larger groups can negotiate better rates than smaller groups, because one or two cases of cancer in a large group will be balanced out by large numbers of employees with reasonable costs.

Fact #3: No matter how large the group is, it will always be cheaper to cherry pick the healthiest people and exclude the rest.

Fact #4: Even if you get individual insurance while you’re young and healthy, as you get older or have more health issues and start to make claims, your insurance company will start seriously raising your rates. It’s not like life insurance where you lock in a low rate for life. It’s more like car insurance where they jack up the price or even cancel your policy if you wreck your car too many times.

Fact #5: Obamacare does add some mandates to insurance plans around mandatory preventative care, elimination of lifetime maximums, and other provisions that logic dictates should cause the average plan to increase in price at least modestly.

Fact #6: Covered California rates are indeed lower than the cost of a small group plan for the same person.

I think we could get both The New Republic and Forbes Magazine to agree on the above facts. So where’s the difference of opinion coming from? Forbes says that the California press release was “misleading” because the cost of an individual plan under the new rules would be a lot higher than the cost of individual insurance; double or more. So it’s an “apples to oranges” comparison. But comparing the cost of insuring anyone with the cost of insuring a hypothetical person with no history of health issues isn’t exactly apples to apples either.

What the new healthcare law does, in essence, is take the entire population of each state and treat them like a single large group, taking advantage of Fact #2, and giving everyone buying power. Of course, the problem is that Fact #3 persists, so there are some people who would have qualified for cheaper insurance before the exchanges existed, and now will have to pay what the group pays. They will, for example, have to pay $200 per month instead of $100 in an extreme example.

So if you want to cheer for the new healthcare law, you focus on the fact that the average healthcare consumer will pay the same or less in the state marketplace, and if you want to jeer, you focus on the portion of the market who will have to pay much more.

Then to pile on, if you’re anti-, you blame that on the mandates and regulations (Fact #5), and if you’re pro-, you hold up the Fact #6 rate comparison and rest your case.

For employers, healthcare reform will bring some positives and some negatives, and the balance between positive and negative will vary tremendously depending on your employee demographics and the choices you make about how to respond to the change. The fact that new state marketplace rates may be higher for young, healthy individuals is relevant, but it’s probably a lot more relevant that many employees will get better rates in the exchanges than many companies are currently paying for a group plan.

The last fact that we should mention is that regardless of your political orientation, there’s a new healthcare law in town, and neither denial nor outrage will prevent it from going into effect. And if you currently have a group health plan, you might very well find that both your company and your employees could end up paying less money than you’re currently paying. And if you have part-time employees who aren’t on your plan, they’ll also be able to get affordable coverage. If you want to find out how you can bring such a rosy scenario about, contact Benefitter.

The minor exception and my feedback: let’s use the government’s own language of “Shared Responsibility Payment” instead of “Penalty” to describe the fee for not offering employer-sponsored healthcare coverage.

Why use the term “shared responsibility payment?” First, it’s accurate. Second, it does not pass judgment on employers who most often are trying to do right by their employees. The “shared responsibility payment” is precisely what it sounds like – a contribution to the government in support of health coverage. In contrast, “penalty” suggests wrongdoing, which is not accurate.

The article features three employers under difficult financial circumstances who are seriously considering whether to pay the “shared responsibility payment” in exchange for opting out of employer-sponsored healthcare coverage. The three companies are:

• Consolidated Management Company of Des Moines, IA
• Firstaff Nursing Services of Bala Cynwyd, PA
• Children’s Discovery Center of Toledo, OH

It turns out that these employers have a few things in common:

1. They’re bigger than 50 employees, meaning they’re considered “large” by federal insurance standards, and are therefore exposed to the “shared responsibility payment”
2. Most of their employees have low-to-average incomes
3. They’re struggling to compete in tough markets

In the Wall Street Journal article, the writers highlight the challenges many U.S. companies face when it comes to healthcare coverage in 2014. In telling the three company stories, the writers provide a sympathetic view of how difficult the situation is for the CEOs, and clarify that covering the “share responsibility payment” is a perfectly reasonably approach in certain circumstances.

Here at Benefitter, we recognize that for many employers, both the organization and employees may be better off without employer-sponsored healthcare insurance. But we also know that it’s a tough decision to make and a tricky transition for workers to begin purchasing insurance on the consumer market. That’s why Benefitter provides software solutions for employers to understand their options and establish a plan, reimburse their employees to “make them whole,” and help guide their employees to the consumer market.

To learn how Benefitter can help you and your employees navigate healthcare reform, visit our website at www.beneffiter.com.

*Wall Street Journal, Emily Maltby and Sarah E. Needleman Article:
Some Small Businesses Opt for the Health-Care Penalty, April 8, 2013
Link: http://online.wsj.com/article/SB10001424127887323916304578401413507987532.html

First, Fisher points out that employers will drop employer-sponsored health coverage, leading to an overall reduction in employer-sponsored health insurance. What she doesn’t explicitly point out is that for employers with average worker salaries under about $60,000, dropping health insurance may be:

• Financially better for the employer, even with the $2,000 shared responsibility payment “headwind”
• Financially better for most employees and their families, who may receive large premium tax credits from the government to cover health insurance

Second, Fisher explains that “dropped” employees will purchase insurance on the quickly evolving individual market. In 2014, no employee will be turned away from the individual market for a pre-existing condition, and employees and their families will be more likely to achieve better portability of their healthcare coverage if they experience a job loss or a job transition. This is important to many employees and their families because it provides continuity of care (i.e., they don’t have to switch doctors).

Third, Fisher highlights that increasing the number of employees purchasing insurance on the individual market may lead to more consumer-oriented behavior, both in the purchase of insurance, and in the subsequent purchase of health services. This consumer-oriented purchasing behavior, in turn, may lead to decreased utilization of unnecessary health services, and ultimately may lower health costs and improve pricing transparency.

Here at Benefitter, we recognize there are several reasons why many employers and their employees would be better off without employer-sponsored healthcare insurance. But we also know that it’s not an easy decision for an employer to eliminate health insurance. Nor will it be a simple transition for workers to begin purchasing insurance on the individual market. That’s why Benefitter provides software solutions for employers to understand their options and establish a plan, reimburse their employees to “make them whole,” and help guide their employees to the individual market.

To learn how Benefitter can help you and your employees navigate healthcare reform, visit our website at www.beneffiter.com.

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SOURCE: Forbes, Nicole Fisher Article: Employers Dropping Health Care Coverage Could Benefit Health Care Quality and Cost, February 2, 2013 —  http://www.forbes.com/sites/aroy/2013/02/20/employers-dropping-health-care-coverage-could-benefit-health-care-quality-and-cost/ 

As with California, Colorado expresses optimism about commission levels: ”Broker and agent compensation should be comparable both inside and outside the exchange,” says Jim Sugden, the manager of the state’s Small Business Health Option Program (SHOP) small business exchange arm

Read more on ProducersWeb: http://www.producersweb.com/r/pwebmc/d/contentFocus/?pcID=e965482358e211942092c7dc5bedd4d9

When we began Benefitter, we were primarily focused on opportunities for employers to fund their employees’ healthcare coverage through HRAs (Health Reimbursement Arrangements) and for employees to purchase insurance on a healthcare exchange. However, in light of announcements in January 2013 from officials in Washington, D.C., it becomes clear that many employers will best serve themselves and their employees by opting out of traditional employer-sponsored group health care in favor of employer-supported individual health care.

While this transition in benefits will be mutually beneficial for a large portion of employers and their employees, making that transition without support could be cumbersome and stressful for everyone involved. That’s why Benefitter shifted our focus onto guiding employers and their employees through this transition, to ensure that everyone truly benefits from this healthcare reform.

To learn how Benefitter can help you and your employees navigate healthcare reform, visit our website at www.beneffiter.com.

SOURCES

http://www.dol.gov/ebsa/faqs/faq-aca11.html

www.irs.gov/PUP/newsroom/TD 9611.pdf)

Before that announcement, many assumed that family members would have access to government assistance even if the head of household was excluded. Instead, once the Act goes into effect in 2014, middle-income families will be precluded from receiving government support if a head of household receives employer-sponsored health care.

The result is that employers of workers with families now face important questions: Are their workers actually best supported with employer-sponsored health coverage, or would those workers and their families be better off buying insurance on the individual market with federal support? Is there a benefits option that can save both employers and their employees money?

The answers to these questions must be taken on a case-by-case basis, because many employees who qualify for premium tax credits will save money with the public health exchange, as will their employers. But some employees may not qualify for premium tax credits, and will instead require employer reimbursements to “make them whole.”

Additionally complicating this decision is the fact that while healthcare reform obligates large employers to contribute to coverage for all employees, this contribution can come in the form of either offering employer-sponsored health coverage or alternatively paying the government a “shared responsibility payment” of $2,000 for each eligible worker in the company.

Deciding alone how to proceed can be complicated and cumbersome for employers, who are already busy enough taking care of the pressing daily operations of their business. Benefitter’s software solutions and services can help employers chose the benefits approach that best fits their company, ensuring that both employers and their employees have benefits at the lowest possible cost. Contact us today at info@benefitter.com.

SOURCES

http://healthreformgps.org/resources/update-when-should-uninsured-family-members-of-employees-with-access-to-affordable-self-only-employer-coverage-qualify-for-premium-tax-credits/

http://www.irs.gov/PUP/newsroom/TD%209611.pdf