TPG’s Healthcare Review: December, 2014
“Here We Go”
Welcome to the twelfth edition of TPG’s Healthcare Review, a forum to keep our current clients, prospective clients, and candidates apprised of the ever-changing landscape of healthcare in a post-reform world. Tracking the iterations, implementations, extensions and exemptions of the Patient Protection and Affordable Care Act of 2010 (PPACA) can be a full time job. Each new day seems to bring a wave of information which needs to be fully digested before the next news cycle starts. We thank you for your interest, and welcome your comments and questions.
We are less than two weeks away from the implementation date of the Employer Mandate of PPACA on January 1, 2015. The Performance Group has been preparing for this event for over two and a half years. All of the “i’s” have been dotted and the “t’s” have been crossed and we have rolled out the plan with great success to those employees who are “Benefit Eligible” on January 1st. Our plan will also add additional employees as they become eligible throughout the year with more one on one employee meetings scheduled on a monthly basis throughout 2015.
The November, 2014 newsletter outlines the TPG Healthcare Plan. Please check our website at www.TPGworks.com to access the newsletter under our “Latest Blog Posts” section.
As we enter the new era of healthcare reform with the dawn of the Employer Mandate, we need to remember that the first renewal period for individuals who enrolled in plans on the exchanges during last year’s open enrollment period began November 15, 2014. Positive news for the administration is that there have not been reports of systems failures or website navigation issues. Last year’s open enrollment period began with numerous technical glitches that crippled HealthCare.gov and other state sponsored exchanges from the first day on October 1, 2013. Without the technical difficulties, this year’s enrollment season will give Americans a clearer picture of whether the program is working for the people it is intended to serve.
During 2014, approximately 6.7 million people carried coverage through the federal and state exchanges created by PPACA. The administration’s goal is to increase that number to a reduced goal of approximately 9 million people in 2015. The existing plans have been set up with an automatic renewal feature, so those 2014 enrollees who do nothing will stay in their existing plans on January 1, 2015. As of mid-December, this appears to be the path chosen by most of the current enrollees. There are some problems with this approach as premium increases for existing plans vary from state to state and without shopping the plans, individuals may be missing out on potential savings. Also, individuals receiving subsidies must update their information to get any corresponding increase in their subsidy. Thus an automatic rollover may lead to the individual shouldering 100% of the increased cost of the plan.
One aspect of change which has come about as a result of PPACA has been the rise of high deductible plans as an affordable choice over the more traditional health plans of the past. This is particularly true of employer-based health insurance plans. In order to control costs, employers have moved away from plans which would begin paying providers’ claims from a relatively low deductible level. These traditional plans allowed the covered individual to receive benefits with limited out-of-pocket costs. Utilization rates were high and the costs were shifted to the employer.
The high deductible plans have brought a balance to the market where consumerism has entered the equation for preventative and wellness care while catastrophic protection exists in the event of a major medical event. The question economists are now asking is whether the growth rate of healthcare expenditures has fallen to a point where wages will be able to absorb the increases and begin to grow in real terms for the average worker. Whether there has been a true shift in the structural cost of the healthcare system is yet to be determined.
With a shift in the cost structure, the credit agencies (Moody’s, Fitch, and Standard & Poor’s) continue to have a negative outlook on not-for-profit hospitals. The belief is that these hospitals tend to be smaller and will have a difficult time implementing cost-cutting strategies necessary to deal with the reality of falling patient volume. The proliferation of high deductible plans will reduce the number of highly profitable “private pay” patients which don’t have insurance. Again, only time will tell whether these shifts are permanent or are a result of the slow growth economy and PPACA.
The last point to cover this month is whether this newsletter will continue beyond the end of 2014. I have been asked this question by quite a few readers and was pleased to know that this has been of some value to them. With the encouragement of quite a few of you, this letter will continue on at least a quarterly basis. Additional updates may come throughout 2015 as the law will be massaged by a new balance of power in Washington, DC and the important ruling from the Supreme Court regarding the legality of subsidies through the federal exchanges.
Once again, we at The Performance Group appreciate your interest in this newsletter, our company and our services. This year has been a time of preparation and we are happy to say we are ready. Please let us know if you have any questions and a TPG representative will be glad to sit down and discuss these issues with you.
At The Performance Group, we want to wish you and your families and friends a Merry Christmas, Happy Holidays and a Happy New Year. Be safe, and we’ll see you back here next year.
Thomas E. Readdy
President
The Performance Group
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