Employers here say it's too early to know how coming provisions of national health-care reform will impact the insurance plans they offer to their employees, or their own bottom line, but insurance brokers say those impacts are starting to come into focus.
Health-care reform has been a big topic of discussion for administrators at Northern Quest Resort & Casino, which has nearly 1,400 employees, says Kent Caputo, the West Plains casino's chief operating officer.
"It's complicated stuff. We're just making sure we understand what's required," Caputo says.
Alison Marlin, a spokeswoman here for Hollister-Stier Laboratories LLC, says the pharmaceutical company is going to "wait and see at this point," regarding changes it might have to make to cover its 550 employees. "There are so many different facets, and it's so complex," she says.
Health-care reform is a far-reaching measure, but some of its provisions have grabbed the attention of employers, including some in the first wave that take effect Sept. 23. Among them are mandates after that date that employer-sponsored health plans can't include out-of-pocket costs for preventive services, can't cap lifetime benefits, and must cover employees' dependents up to 26 years of age. Other provisions prevent the cancellation of policies and prohibit restrictions against covering pre-existing conditions for enrollees under age 19.
Angela Dowling, managing executive of employee benefits for Missoula, Mont.,-based Payne Financial Group Inc., which has two offices here that employ 36 people, says the U.S. Department of Health and Human Services is defining exactly what will be required of employers to comply with the new law, formally called the Patient Protection and Affordable Care Act, which was passed into law in March. Dowling says Payne Financial is telling its clients to make efforts well beforehand for the changes they'll eventually have to make.
"There's some long-term planning that needs to take place," she says. "For clients with over 50 employees, by 2014, most of the act will be implemented." At that time, Dowling says, "they will have to provide coverage to a lot of employees not currently covered."
Mark Patrick, a partner with Moloney O'Neill Benefits LLC here, predicts that the impact on employers, at least in the short term, will be premium increases of between 1.5 percent to 3 percent, depending on their plan. He says the first wave of adjustments will have minimal impact on employers in Washington state, because "pre-existing condition clauses for children have been in place for a long time," and the requirement to insure older dependents took effect earlier this year, so those costs already have been absorbed by health insurers and their clients.
Also, according to the Washington state Office of the Insurance Commissioner, some employers could choose to "grandfather in" their current health plans to delay the new provisions. If a current health plan was put into place before March 23, 2010, and the employer doesn't make changes to the plan, the employer doesn't have to meet the new rules, the commissioner's Web site says.
Grandfathering in a plan might be hard to do for some employers, who might need to modify plans or the amounts of employee contributions to be able to afford the normal rise in health-care insurance costs, says Stephanie Marquis, a spokeswoman for the state insurance commissioner. Such modifications would put them under the new rules.
"Many are finding they can't afford the cost" of maintaining a grandfathered plan, she says. Marquis adds that as costs increase, they'll find they're "paying out more in claims, so they need to increase their rates. If the employer wants to pass on more cost to employees, they lose their grandfathered status."
Mike Jones, director of human resources at Zak Designs, a Spokane manufacturer with 142 employees, says he's attended several seminars on health-care reform, but doesn't know yet what decisions the company will make in response to the new provisions.
"We don't know if it will increase our costs. That's a definite question we have," he says. Jones says he knows the company's current health plan is eligible for grandfathering, but "during the next two months, we'll be sitting down with our broker. We're going to wait and see at this point."
Some insurers already are telling smaller employers that grandfathering in an existing plan won't be an option, because the insurers don't want to offer both grandfathered plans and non-grandfathered plans, says Patrick.
Other employers believe that health-care costs will continue to rise, so not being able to modify plans to respond to those costs would offset any savings that might come from staying with a grandfathered plan, he says.
With most carriers, large employers will have the opportunity to make a choice between retaining an old plan or changing to a new one, Dowling says.
Patrick says some employers also are concerned because the new rules will force them to treat all of their employees equally in the benefits they offer. They don't have to do that now, he says, adding that some employers have offered different benefits to different employees. That change might be a reason an employer would stay with a grandfathered plan, he says.
Beginning in 2014, small businesses, defined in the health-care reform act as having 25 or fewer employees with average annual compensation below $50,000, will be able to buy insurance through a "health insurance exchange" that will be formed.
At that time, for any business with more than 50 full-time, year-round employees, if an employee requires a government subsidy because the employer doesn't provide health insurance, the employer will be charged a $2,000 penalty, the insurance commissioner's office says. If the employer offers health insurance, but it's considered unaffordable, the penalty is $3,000 for each employee seeking a subsidy.
Up until 2014, small businesses that provide health insurance for their employees will be eligible to receive an income tax credit from the Internal Revenue Service equal to 35 percent of their contribution toward the premium businesses pay on those plans, as long as they pay at least 50 percent of the total premium, the insurance commissioner's office says. From 2014 to 2016, that tax credit would increase to 50 percent, the insurance commissioner says.
Steve Blaschke, an employee benefits consultant with Fidelity Associates Insurance & Financial Services here, says businesses are asking, "What is it going to cost me if I don't provide insurance for my employees?" His answer is that the government will pursue penalties against employers that don't provide insurance, and his advice is, "You have to determine what's going to make the most sense for you economically. Would it be better to use employee benefits to attract and retain quality employees?"
At Northern Quest Casino, the Kalispel Tribe of Indians plans to continue to pay 100 percent of health insurance premiums offered to the casino's employees.
"The Tribe will look at all other cost-saving measures before considering impacting employee health care," says Jane Baker, spokeswoman for the tribe.
"Traditionally, employers have shifted increased health-care costs to employees," Payne Financial's Dowling says. "I expect that will continue, but that will be restricted over time. Legislation will limit how much they can shift. Employers will have to pick up more costs. Health-care plans will not become less expensive."
Another provision of health-care reform is a requirement for employers to provide insurance to workers who put in 30 hours or more a week, which could add to an employer's enrollment, and thus to health-care costs.
In its educational publications for clients, New York-based Mercer Health & Benefits LLC raises the question of whether that provision will cause employers to cut employee hours rather than expanding their access to health-care coverage.
"I do see that's a potential problem," Dowling says. "In professional industries, probably not, because they're already covering a majority of their employees.
Industries where they're not able to do that are those with a high turnover, like hospitality and retail. Those who struggle with providing coverage now will limit some of their employees' hours."
When asked if he foresees employers cutting employee hours to avoid paying for insurance, Patrick says, "I hope not. I don't think so, but in an economy like this one, everything's on the table. Businesses will do what they've got to do to survive."
Says Suzanne O'Neil, a principal here with Mercer, "Our biggest concern is for clients that have a large population of seasonal employees. They may be required to extend coverage to employees that they normally wouldn't cover. For agricultural employers, that's a concern. The law could increase their costs dramatically."
Amid the new changes and continuing concern about increased health-care costs, one way some employers are trying to minimize those costs is through what's called "total health management." Under such a strategy, employers provide incentives to employees to help them make healthier lifestyle choices, and when they get sick, guide employees through the health-care system as economically as possible.
O'Neil says total health management is "getting a lot of traction in Spokane," because "employers are looking for long-term strategies to reduce health-care costs."
One Spokane concern using the strategy is Hollister-Stier. Kirk Wood-Gaines, vice president of human resources and communications there, says the company provides health assessments on a voluntary basis to employees twice a year. Health factors such as blood pressure, cholesterol levels, and body mass index are charted.
"With the help of doctors, we've determined what's normal. If an employee falls within the normal range, we pay an additional 10 percent of their premium," Wood-Gaines says.
If an employee doesn't fall within the normal range at one of the screenings, but works hard to improve their numbers with diet and exercise and falls within the normal range six months later, the company will supplement their premium by 20 percent.
The company also offers monthly on-site seminars on meal planning and preparation, managing calories, exercise technique, and alternatives to joining a gym, and provides an on-site Weight Watchers program, Wood-Gaines says.
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