Shan Fowler, senior director of Product Strategy at Benefitfocus, based in Charleston South Carolina, says since the passage of the Affordable Care Act (ACA) he has taken on the role of policy expert to help employers navigate changes created by health care law.
He tells PLANSPONSOR that Republican leadership on both sides of Congress have indicated they want to put more into supporting employer-based benefits.
Some significant pieces of the Senate version of the legislation appear to be similar to that of the House version. It repeals the employer and individual mandates, reduces taxes, removes the annual contribution cap on health flexible spending accounts (HFSAs) and increases annual contribution limits for health savings accounts (HSAs).
The Senate version also keeps many of the provisions of the Affordable Care Act (ACA) that were popular with employers, including the requirement to cover dependent children through age 25. The only ACA provision in the House bill that was changed in the Senate bill is allowing states to define essential health benefits.
Fowler says the Senate version of the bill still allows for subsidies for people who do not get coverage by employers. “They seem more generous than in the House bill. The Senate bill maintains an income-based approach to subsidies as used in the ACA, rather than the House version’s age-based approach, but rather than letting subsidies go to people who make up to 400% of the federal poverty level, the Senate bill cuts that down to 350%,” he says.
Fowler notes that this means employers will still have some kind of reporting, such as 1094 and 1095 reporting so the government can know if a person is eligible for employer coverage. However, look-back reporting would seemingly go away because of the repeal of the employer mandate.
One change made in the Senate version of the bill is the removal of the continuous coverage requirement. The House bill included a provision that beginning in 2019, individuals would pay a 30% premium surcharge if they have a coverage gap of more than 63 days during a 12-month look-back period.
“The Senate bill is generally good for employers,” Fowler says.NEXT: Provisions that may cause residual impacts for employers
However, Fowler notes that there are some provisions, not related to employer coverage, which could have a residual impact on employers.
For example, he says, “Cutting more than $700 billion from Medicaid over a five-year period starting in 2020 or 2021 arguably leaves the working poor exposed to additional costs and financial stress. This could have a residual impact on their ability to work and what these employees will ask from employers.”
In addition, Fowler notes that what is taken out of the subsidy structure could have an impact on the ability of self-employed people to get coverage. “This may encourage those self-employed to look to larger employers for employment in order to get coverage. Some say it may stifle entrepreneurialism,” he says.
The Senate’s stance on essential health benefits also may cause a residual effect on employers. “The Senate bill gives states some discretion in defining essential health benefits, so theoretically, a state could say maternal coverage is deemed not an essential health benefit as it is currently. This provision could change benefits coverage offered by insurance providers or providers may charge more for what states deem not to be essential health benefits. It may prevent people from getting coverage for things that drive a lot of costs. They may not be denied coverage outright, but offered coverage too expensive to handle,” Fowler explains.
The Congressional Budget Office (CBO) estimates 22 million fewer Americans will have coverage under the Senate version of health reform. “Employers are concerned about cost-shifting by providers to employers. Private insurance is charged double to 25 times what those on Medicare and Medicaid pay. If fewer are covered by those programs, providers will have to make up costs somehow, and the way they’ve done that in the past is to charge private insurance even more,” Fowler says.NEXT: Conflicted views by benefits professionals
Fowler suggests not drawing a stark line between how health care reform will benefit employers and potentially hurt employees. “If it has a material impact on employees, it will likely have a residual impact on employers as well,” he says.
Benefit professionals are humans too, so some have a conflicting view of the health care changes. While there may be some employers that are not paternalistic in their benefits offerings, for the most part, human resources (HR) employees want to take care of employees. “They come from all political backgrounds and want things to be well-considered because it matters to people,” Fowler says.
He notes that what is happening in the public and individual coverage market can really impact decisions made in the employer market. He cites a report issued about 10-years ago by the U.S. Chamber of Commerce encouraging employers to help employees find public sources of safety net support—supplemental nutrition assistance program (SNAP), Medicare, Medicaid, food stamps, Head Start— because these programs are meant to address in a positive way the impact of poverty. “If an employee is struggling to make ends meet or find child care etc., moving to these programs reduces stress and helps with absenteeism. It’s not a silver bullet, but by encouraging employees and helping them find these things, employers can increase their effectiveness as employees,” Fowler says.
He notes that employers Benefitfocus speaks to that have a large hourly workforce see this reality, so they have concerns about the bill that go beyond political convictions. They’re asking, “How will this affect the lives of our employees and what can we do for them?”Fowler says Benefitfocus’ customers are anxious and confused about the impacts of new health care reform, and some are not making major strategic decisions right now. However, at the same time the need for health care coverage continues and the use of benefits as a recruitment and retention tool continues. “Employers are continuing to modernize benefit programs through new kinds of benefits and technologies, but as for broader macro decisions, they are waiting to see what plays out,” he says.