Queens Chamber Members Hear PPACA Explained
In late July, members and guests of the Queens Chamber of Commerce attended two successive meetings at QCC headquarters in the Bulova Center in East Elmhurst to hear of the current and future impact of the Patient Protection and Affordable Care Act of 2010 (PPACA) on small and large businesses. Sher Sparano, founder and president of Benefits Advisory Service (BAS), a Forest Hills-based company that aids and instructs businesses in effective implementation of benefits for employees, conducted both meetings. The first meeting covered affordable care as it applies to companies with 100 or fewer employees and the second to those with more than 100.
Much of the subject matter generally applied to both meetings, beginning with an assessment of the PPACA, now that it has received narrow approval in the United States Supreme Court. Sparano said the Supreme Court decision left the situation “fluid”, meaning that much is bound to be altered as compliance with the law and reaction to it transpire in years to come. Whatever the results of the presidential and congressional elections this November, Sparano asserted, the entire law can never be repealed, but those supporting it must get ready to accept changes to its massive structure, some of which might be displeasing to them.
Sparano agreed with widespread assertions that the bill was not well written, but noted that employers large and small have to live with it and will probably need help working their way through it. They should be familiar with the provisions now in effect, including extension of dependent coverage to age 26; no limitations owing to pre-existent conditions to anyone under age 19; the right to appeal an insurer’s decision, and implementation of a minimum medical loss ratio (MLR).
The rise of health insurance exchanges (HIX) or health benefit exchanges (HBX) is bound to be one of the new law’s effects. Mark Kessler, director of strategic initiatives for HealthPass New York, which serves small businesses in the five boroughs and nine downstate counties, said New York state will certainly build a health benefit exchange, whatever may happen in Washington, D.C. He noted that many who were formerly averse to healthcare brokers and exchanges are now accommodating them. The New York plan would be a basic one, providing employer-employee choice distributed through brokers and organizations such as chambers of commerce. He was sure the state would resist any cross-border efforts to undermine its regulation of the exchanges and would fight such moves all the way to the Supreme Court.
Sparano said that if President Barack Obama were to be reelected in November, he would be strong on HBX, to accompany federally funded exchanges (FFE). Were he to have a Democratic Congress, he could thus get approval for them or, against the opposition of a fully or partially Republican Congress, could establish them by executive authority. A Mitt Romney presidential victory and a Republican Congress would probably lead to product choices by the states in the wake of large-scale, if not complete, repeal of the PPACA. On these exchanges, employee choices would doubtless be subject to employers’ power of restriction. Private exchanges and cross-border sales would surely expand, but cross-border sales would probably run into opposition in other states, similar to opposition in New York, with a Supreme Court case a likely eventuality. Should Romney as president encounter a Democratic or divided Congress, he could stifle HBX and FFE by executive order.
The law in its current and projected state can be examined apart from such scenarios. One measure that has been in effect since early 2010 is the Small Employer Tax Credit, through which small employers offering insurance become eligible for tax credits equal to 35 percent of the premiums paid, increased to 50 percent in 2014. Medical loss ratio (MLR) rebates and expanded no-cost preventive services for women have recently gone into effect also. Before this year is over, each employer must issue a Summary of Benefits and Coverage (SBA) to each employee, or be liable for penalties of $100 to $1,000 per employee. Also due in 2012 and applying to large businesses is Form W-2 reporting, which would require employers to report the value of healthcare coverage as a matter of information, though not as a taxable income item, in companies where 250 or more W-2s are issued annually. At the beginning of 2013, the Flexible Spending Account (FSA) limitation and the Medical Payroll Tax take effect, while in March the Employee Exchange notice kicks in. At the end of next July, the Patient-Centered Outcome Tax (P-COT) becomes effective. Several parts of the law will then take effect in the period between January 2014 and January 2018 (though none in 2015), bracketed by the “play or pay” Employer Mandate at the outset and the so-called Cadillac Tax at the close.
Sparano and other speakers said that the health exchanges due to go into effect next March are bound to be delayed. The Medicare Payroll Tax was identified as a point-nine (0.9) percent tax on employees making more than $200,000 annually, or on families making more than $250,000. Of the Patient-Centered Outcomes Tax, which expires in 2019, Sparano said that it appeared to be something to be paid entirely by employees in the long run. The Employer Mandate drew criticism of its proposed penalty for employers who decline to provide the more than 50 employees on their payrolls with insurance. David Angerman of United Medical Resources (UMR), a third-party administrator between employer and employees, said he was “concerned” about it and Sparano said it has untenable complications that could eventually bring it down.
Near the end of the second meeting, Angerman said that another probable effect of the PPACA will be the spread of consumer-driven health plans with high deductibles, and wellness plans with preventive medicine emphasis on healthy diets, safe body weight and ending smoking. During the first meeting, David Capo of BAS said that insufficient attention to wellness plans was a signal fault of PPACA’s designers. A wellness plan tends to require participation if it is to be effective, so employee willingness is paramount. As an example, Mark Kessler of HealthPass New York, a diabetic, said his wellness plan pays him $25 monthly if he maintains a proper blood count. Angerman also talked about self-funding, which among other things makes an employer acutely aware of the design and cost of service, as well as the importance of a third party administrator (TPA) such as his own UMR. He said TPAs have strong medical networks. With self-funding, employers are responsible for the claims of their employees only; and wellness-planning grows almost naturally out of any such program.
In summary, participants in both meetings agreed that there are compliance hurdles ahead. In addition, strategic planning at all levels, from personal to governmental is necessary, as is also good advice from good advisors. It appears that no matter what political figures may decide, health care as it is now known in the United States will be transformed in the next decade.