Edward Fensholt, JD, SVP and director of the Compliance Services and Health Reform Advisory Practice at Lockton Benefit Group, said: “[T]here’s no question the PPACA [Patient Protection and Affordable Care Act] has, to this date, bent the health insurance cost curve north, not south. As additional taxes, fees and mandates on employer-based health coverage come on line, we fear the health insurance affordability forecast will continue to deteriorate.”
Speaking at a hearing for the House Education & Workforce Subcommittee on Health, Employment, Labor and Pensions (HELP), Fensholt cited the coverage of dependents up to age 26, non-discrimination rules requiring the same coverage for all employee groups, and the requirements to reduce waiting periods to 90 days and auto-enroll eligible full-time employees in available employer-based coverage as drivers of the cost increases. In addition, Fensholt claimed excise taxes levied on insurers and third-party administrators (TPAs) will just be covered by additional cost of products.
Fensholt also testified that Lockton clients are frustrated with the additional administrative burdens imposed by the health reform law. Under federal law and regulations today, a simple group health plan is required to supply up to more than 50 separate notices, disclosures and reports to its enrollees and the government (many of those more than once), and the PPACA has added more than a dozen additional notice and disclosure obligations to health plan administration, he said.
Roy J. Ramthum, president of HSA Consulting Services, expressed concern that provisions in the health reform law will affect the success in reducing employer health care costs of consumer-driven health plans (CDHPs).He cited the requirement that employees obtain a prescription for over-the-counter medications in order to pay for them through a health savings account (HSA), the limit of health plan deductibles and the requirement for plans to provide an actuarial value of at least 60% of the cost of benefits covered by the plan as threats to CDHPs.
William Streitberger, vice president of human resources at Red Robin Gourmet Burgers, testified: “Increasing health care costs through mandates that can negatively impact the ability of companies to offer attractive benefits to employees forces companies like Red Robin to decide either to reduce benefits and maintain affordable coverage or accept the burden of increased company contributions – limiting our ability to grow the business, attract talented people to our organization and add to our payrolls.”
However, on a positive note, Jody Hall, owner of Cupcake Royale & Verité Coffee of Seattle, Washington, speaking on behalf of the Main Street Alliance of Washington, stated: “The Affordable Care Act is taking critical steps forward to address the barriers to lower health care costs and bring affordable, good quality health coverage within reach for small businesses. Many businesses are already seeing the benefits as early provisions of the law take effect.”
Hall said a state insurance exchange will give small businesses the opportunity to band together with thousands of other small businesses, and joining a pool with hundreds of thousands of participants will be a huge improvement in risk-pooling, efficiencies of scale, and negotiating clout for small businesses.
In addition, Hall claimed the 80/20 value for premiums rule, or “minimum medical loss ratio” requirement, which requires health insurers to spend at least 80% of our premium dollars on actual health care costs or pay a rebate to consumers is a basic guarantee of value from health insurance companies that is common sense."
Hall added: “The employer responsibility provision of the ACA is another way the law will help lower insurance costs for businesses like mine. This piece of the law is often presented as a problem for small businesses. I believe the opposite is true. As a business owner who’s doing the right thing and offering health coverage to my workers, the real problem for me is that when other businesses my size (and bigger) don’t offer health care, I’m forced to subsidize their health care costs. The shifting of uncompensated health care costs to businesses that pay for health insurance costs my business hundreds of dollars per employee per year.”Complete information about the hearing, including witness testimony, is available at http://www.edworkdorce.house.gov/hearings.
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