State Decisions About Health Reform Could Impact Employers

July 12, 2012 ( – Texas Governor Rick Perry announced Texas has no intention of implementing a state insurance exchange or expanding Medicaid as part the new health care reform law.

More states that oppose the health care reform law could follow suit.  

In a Mercer webcast about the legislation, Amy Bergner, partner, warned how these decisions may adversely affect employers. She said states not expanding coverage may create a gap between those eligible for Medicaid and those eligible for premium subsidies for exchange-based coverage. Some individuals will not be eligible for either.  

This could change projections of employer plan enrollment and shared responsibility penalty exposure, Bergner noted. In addition, employers’ anticipated relief of cost-shifting from uncompensated care may not occur.  

Bergner added that paternalistic employers should consider that some employees, such as part-time workers or others not eligible for their health benefit plan, could be left with no help to obtain coverage.  

Following the U.S. Supreme Court’s decision that states cannot be threatened with the loss of their federal funding for Medicaid if they choose not to expand the program, in a letter to U.S. Health and Human Services Secretary Kathleen Sebelius, Perry wrote: “[P]lease relay this message  to the President: I oppose both the expansion of Medicaid  as provided in the Patient Protection  and Affordable  Care Act and the creation of a so-called “state” insurance exchange, because both represent brazen intrusions into the sovereignty of our state.” Perry said in a press release: “I will not be party to socializing healthcare and bankrupting my state in direct contradiction to our Constitution and our founding principles of limited government.”