Businesses learn about health-care act
Small enterprises are about to see some big changes in their employee-benefits picture as more provisions of the federal government’s health-insurance reform law take effect, participants said during a Chamber of Commerce symposium.
Come Jan. 1, some of the highest-profile aspects of the Affordable Care Act will take effect, among them its controversial “individual mandate” to buy insurance and the “exchanges” set up as clearinghouses for individual and some small-business purchasing.
For businesses with up to the equivalent of 50 employees, 2014 likely will bring a re-jiggering of any coverage they now have for their workers, consultants and Blue Cross and Blue Shield of North Carolina executives said.
“Virtually all” small-group policies in force today in North Carolina “are not compliant” with the federal law’s provisions and will have to be reconciled come renewal time, said Wally Dawson, managing principal of Digital Benefits Advisors.
“All employers in the small-group segment are going to have a change in 2014,” Dawson said.
But Blue Cross officials said they’re prepared to offer customers ACA-compliant policies and are awaiting only final approval of them by state regulators.
The new plans must meet proscribed limits on what they ask an organization’s employees to pay out of pocket. Blue Cross Senior Marketing Strategist Rob Bultman said the company is boiling down an existing menu that includes thousands of plans to one that will have just 100.
Of those, nine will be made available to small-business buyers on the “shop,” short for Small Business Health Options Program. Organizations using it can qualify for tax credits that would offset some of their costs.
All 100, Bultman said, will also be available on the insurance “exchange” that the federal government will operate for individual buyers. Those using it can qualify for subsidies as well, depending on their income and the size of their family.
The company also will sell policies to firms and individuals directly, but those can’t qualify for tax subsidies.
Blue Cross for now is the only insurer that has sought to make policies available to small business on the “shop.” It’s one of three that will sell through the exchange, but the only one of those three that will sell to customers in all 100 North Carolina counties.
Bultman said the new plans will be structured similarly to traditional offerings.
“We thought we’d calm your fears,” he told an audience that included chief executives and human-resource pros from a variety of Durham-based enterprises, both large and small. “Some of these things will look pretty familiar to you.”
One wrinkle in the pending change is that the law is forcing insurers to change the way they “rate” or price their coverage plans, by, among other things, eliminating any consideration of gender or a person’s medical history in pricing.
Going forward, they’ll only be able to consider a buyer’s age, family structure, locale and tobacco habits, said Walker Wilson, director of Blue Cross’ health policy office.
State legislators have gone further than the feds in limiting how much extra an insurer can charge someone who smokes. Rates can vary with any given year of a person’s age, and employers will have to keep closer track of how many children are in a worker’s family.
The changes to pricing factors will create a “one or two year bump in the road” because it’ll take insurers a while to figure out how to weight them, Dawson said.
Early on, it appears likely that the new system will reward people in companies that have relatively older and less healthy workforces, and hurt those with a younger and healthier staff. But Dawson said those effects aren’t likely to linger as the industry adjusts to the new regime.
“The important point is there’s going to be a lot of churn” in premiums, Bultman added. “Some groups are going to get some shocks; some groups are going to say, ‘Wow, I love this.’ You’re completely transforming to a new way of rating.”
One thing that will go away, he added, is the sort of price hit a company can now suffer at renewal time if a worker or two experienced a major illness. “Hallelujah,” an audience member said in response.
Bultman and Dawson agreed, though, that premiums overall will rise. “The purpose of the law was to increase access,” Dawson said, adding that any cost savings from the bill would likely not appear until the next decade.
Thursday’s symposium was organized by the Greater Durham Chamber of Commerce, for the benefit of member businesses looking for more information on the pending effects of the federal legislation.