TPG’s Healthcare Reform Review: What’s Ahead in 2014
Welcome to the inaugural edition of TPG’s Healthcare Review. We will use this forum to keep our current clients, prospective clients, and candidates apprised of the ever-changing landscape of healthcare in a post-reform world. We will share our perspective as an employer, a staffing consultant to employers, and as healthcare consumers ourselves. As the specifics of the Patient Protection and Affordable Care Act of 2010 (PPACA) and its implementation are still evolving, it is our intent to update this newsletter monthly through the end of 2014 to keep you well-informed of the latest developments and their implications. We thank you in advance for your interest, and welcome your comments and questions throughout the New Year.
As of mid-December, this is where we stand with PPACA: The central focus of the past few months has been the newly created health insurance marketplace, or “exchanges.” Conceptually, these exchanges were developed to provide coverage choices for those individuals without insurance as well as those who have insurance but were interested in exploring other options. The launch date for the exchanges was October 1, 2013, and those who attempted to register through the electronic exchanges were greeted with long delays, error messages and frustration. This was an inauspicious start to the largest domestic policy expansion within our nation since LBJ’s “Great Society.”
The intent was for consumers in every state to have the ability to set up an account, file an application for an insurance policy, and learn if they were eligible for subsidies to lower their out of pocket premium costs. The task was daunting as the development of a new government website for the majority of the states, as well as the upgrades necessary to existing exchanges operating in other states, required the integration of multiple computer systems (IRS, individual state Medicaid, private insurance companies). Subsequently, it was discovered that the websites were not ready for the anticipated volume or the functionality necessary to implement PPACA’s ambitious goals.
Beyond the technical difficulties of the exchanges are the actual costs of the healthcare mandates connected to the law. The underlying insurance policies offered by private insurers cover a set of “essential health benefits” as defined by the law. Since the exchanges opened, it has not been uncommon to hear of increases in policy premiums of 50% or more. Some of the reasons for the increased cost include the requirement that the health plans accept those with pre-existing conditions and cover those conditions. The plans also can’t charge different rates based on gender. For example, inexplicably, each new policy requires prenatal and maternity coverage whether the individual policyholder is male or female.
There are also required coverages in the act, which are at the heart of ongoing religious freedom arguments. This has fed a series of legal challenges to PPACA which continue to this day. As an example, the United States Supreme Court has agreed to hear arguments from two private corporations regarding certain coverage requirements, and the results of that combined case will impact the inevitable amendments to the law down the road.
Open enrollment in the healthcare marketplace began October 1, 2013 for coverage that can start as early as January 1, 2014. Most employers were required to notify employees of their health insurance marketplace options by October 1. As of today, the open enrollment period closes March 31, 2014, and will not open again until mid-November, 2014, after the mid-term elections. However, it will be possible to enroll outside of the open enrollment period if an individual experiences a qualifying life event (marriage, divorce or new baby), a change in income, or move to another state.
Key challenges remain beyond the technical glitches and coverage requirements. The employer mandate, which was to be part of the law January 1, 2014, has been postponed until January 1, 2015, and the Small Business program has been postponed until November 2014. This pushes some additional issues down the road. As a majority of private health insurance coverage is provided by individual employers, it may be a year before the full impact of these issues is felt. The law prohibits tiered classes of coverage so the “one size (and cost) fits all” philosophy has been applied to all corporate providers. Individual plus dependent coverage is mandated, but not spousal coverage, so many corporations feel compelled to drop spousal coverage altogether, forcing those individuals into the exchanges to obtain family coverage on their own. As the law requires coverage for fulltime employees (as defined by those working an average of 30 hours per week or more), many large employers in certain industries (food service, retail) have cut the work week to 28 hours to avoid the coming mandate.
There is a resulting coverage issue with the roll-out too. It had been reported that there were as many as 30 million uninsured Americans at the time PPACA was signed into law in 2010. With the low level of enrollments into new policies thus far (approximately 132,000 in October and November), and the large numbers of policy cancellations due to the new requirements (estimated in the multiple millions), the number of uninsured Americans will actually rise significantly at first with the implementation of the law.
Finally, there is the issue of education of individuals regarding health insurance. The individual mandate for insurance remains in place and goes into effect just a few weeks from now on January 1, 2014. If individuals do not purchase an insurance policy, they will be subject to a fine (or tax as designated by the United States Supreme Court). Many individuals have not had to deal with the intricacies of health insurance and terms like premiums, deductibles, copays, out-of-pocket limits, etc. There are still coverage exclusions, limitations on participating providers, in-network payments, out-of-network exclusions, prescription limits, brand names, generics, formularies, etc. Insurances have been grouped into metallic classes of platinum, gold, silver and bronze. The complexities of healthcare insurance and what all the terms mean has not been addressed during the ongoing debate over PPACA and its impact on the American healthcare system.
We will address each of these issues over the months to come, as well as The Performance Group’s solutions for dealing with the upcoming employer mandate. With the current political climate in Washington, DC, we will all stay tuned to each new development. One thing is for sure, some amount of compromise will be necessary. As a trusted employer, staffing partner and fellow consumer, we will help you figure out the best way to utilize the law and understand its implications in 2014 while preparing you for 2015.
From all of us here at The Performance Group, we wish you and your families a most blessed Holiday season and a prosperous New Year.
Thomas E. Readdy
President
The Performance Group