Monday, December 19, 2011

Told ya so (v13+)

As we've long documented, ObamneyCare© creates many more problems than it (ostensibly) solves: fewer choices, higher costs, increased compliance issues, the list goes on. But that's just us, right? We're (obviously) industry shills with an axe to grind.

(Which, of course, doesn't change the fact that we've been right)

Well, then, how about some corroboration from an actual employer who can attest to all these things?

Keith Ashmus, a co-founding partner of Frantz Ward LLP, helps run a medium-sized law firm in Cleveland. Of their 120 employees, about 70 are attorneys, and the rest are there to keep things running smoothly. They've been participating in Medical Mutual of Ohio's COSE (Council of Smaller Enterprises) small group health insurance plan for some time, and been quite satisfied.

Unfortunately, they've now run into the buzz saw that is ObamneyCare©:

"With the advent of the Affordable Care Act, we have been concerned about compliance. Our high deductible plan has deductibles higher than what apparently will be permitted."

Like many firms, they've recognized the value of Consumer Driven Health Care plans, including Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs). Unfortunately, these types of plans are taboo under ObamneyCare©, even though (or, perhaps, because) they work.

"By purchasing our plans through COSE, we have not had to pay a two percent premium tax on group health insurance as mandated under Ohio law."

While 2% may not seem like much, if one posits a $500,000 annual health insurance bill (a not unreasonable supposition), then that represents $10,000 in savings. It's unclear (but unlikely) whether that exemption will still be available through the Exchanges.

And so the firm has been choosing "grandfathered" renewal options in order to avoid the problem. The challenge, of course, is that this has become increasingly difficult, and expensive. Not to mention the fact that these will be phased out rather soon, anyway.

"Given our pay scale, it is unlikely that our employees will qualify for subsidies on any state exchange."

There are two issues implicit here: first, there's the tacit acknowledgement that they'll likely be doing away with their group plan altogether. Second, should Ohio choose to go with a Fed-run Exchange, there'll be no such subsidy available regardless of their employees' economic status.

"Then in 2018 and later, the administration of the so-called “Cadillac” tax appears likely to be incredibly burdensome to employers."

Quite right, and as Mr Ashmus notes, this will be a double-whammy: first, there's the added expense of calculating the various expenses and such, and then reporting these to the carrier, which must then determine whether or not a tax is due (and don't forget that the added expense for this "service" will be borne by the employer, not the carrier). Finally, if there is, in fact, a tax due, well, someone's got to pay it, and (again) it won't be the carrier.

One more item I found interesting: with all the emphasis and press on so-called "wellness" programs, the nagging question has always been "and so?" Well, here 'tis:

"In an entity as small as ours, the positive impacts of wellness programs are unlikely to be felt in our health care costs, since community rating puts everyone’s experience together.":

This is the ugly little secret: unless you have a self-funded plan, your rates are determined primarily by the experience of the pool in which you've been placed. So even though your group may have had a "good" year, your rates are going to go up to offset the sicker groups.

But here's the real problem, also neatly put by Mr Ashmus:

"The uncertainty about what will happen with the Affordable Care Act ... is a definite barrier to planning for our insurance benefit program and expansion of our firm."

This goes beyond just the insurance issues, of course; how does one plan if there's so much doubt about whether or not what you choose today will be doable, or even legal, tomorrow?

Perhaps someone should have read it before they passed it.

[Hat Tip: FoIB Holly R]
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