What Health Care Reform Means for Your Small Business, Part 2

By Phillip M. Perry
Everyone admires the ideal of health care parity. But many people are concerned about the cost. If carriers are required to start covering all those previously excluded individuals who have pre-existing conditions, won’t the higher costs be passed along in the form of higher premiums?

One counterbalance to this scenario is the legislation’s mandate that all Americans purchase health insurance or pay a fine. If enough healthy people join the insurance pool, goes the reasoning, their small medical bills should counterbalance the big bills from seriously ill people. “Insurance is about balancing risk,” says U.S. Department of Health and Human Services Secretary Kathleen Sebelius. “So we need people who are well to be in the system.”

Maybe so, but not everyone is so sure the math will work out. “Carriers are very nervous about the mandate to cover pre-existing conditions,” says Joan Smyth, partner at the New York City-based Mercer consulting firm (www.mercer.com). “They are told that things will balance out because a lot of healthy people who currently don’t buy insurance will be required to do so under the legislation. But the insurance companies are saying ‘not necessarily, because the penalty for not buying insurance is very low and does not kick in until 2014.’ The fear is that a lot of healthy young people will wait until they have an accident before they buy health insurance.”

The carriers’ fears are discounted by Terry Gardiner, national policy director for the Washington, D.C.,-based Small Business Majority (www.smallbusinessmajority.org), an advocacy group. “One of the things to keep in mind is that the mandate to include high risk individuals does not go into effect until 2014 when the exchanges are in place,” he says. “Then there will be 30 million new people covered—including many healthy ones who do not now buy insurance. So there will be new policies and revenues to offset the greater costs for covering high risk people.”

Gardiner also discounts the idea that penalties for not buying insurance are too low. “In Massachusetts [which adopted a similar health reform law] the penalties were even lower than in the federal legislation and most people have joined up and gotten their insurance. Given the possibility of getting reasonable coverage at reasonable costs, most people will jump at it. Also, remember that individuals will be able to get tax credits, so people cannot say ‘I cannot afford it.’”

According to Congressional Budget Office, health reform will reduce the cost of a given plan in the small group market by one to four percent by 2016. As for estimates from the key players that support one side or the other—they are hard to come by, given the unknowns that are factored into the calculations. How many people will opt out of buying health insurance and decide to pay the fine instead? How many people will get sick with serious illnesses? No one knows, so the jury is out and will likely remain so for quite a while. “It’s too early for carriers to have calculated anticipated cost increases,” says Smyth.

Insurance company profit margins might suffer for another reason, suggests Gardiner: “Carriers are going to have to compete with each other in the health insurance exchanges.” But that’s healthy: “The good companies will figure out how to do so.”

GET SOME HELP

The Patient Protection and Affordable Care Act (PPACA) is a massive piece of legislation with provisions that can be difficult to comprehend. Here is some assistance on the web:

The U.S. Department of Health and Human Services (HHS) has launched a website to provide information about the health care reform legislation at www.healthreform.gov. See especially the link to a YouTube video: “Health Reform and Small Business.”

The Kaiser Family Foundation has created an outstanding compendium of documents summarizing the health reform legislation. Go to http://healthreform.kff.org. See especially the document titled “Summary of New Health Reform Law.”

The Small Business Administration (SBA) has posted information on how health care reform will affect small businesses. Go to www.sba.gov and click on “Health Care Reform.”

Mercer, the New York based consulting firm, has mounted a useful site with documents and guidance about the health care reform. Go to www.mercer.com.

Patient Protect and Affordable Care Act Positive for Optometrists

Courtesy of: The Review of Optometry

The Patient Protection and Affordable Care Act (H.R. 3590), signed into law by President Obama on March 23, contains several key provisions that are positive for optometrists. Along with provisions from a separate “reconciliation bill,” signed by the president a week later, the new legislation will: Prohibit health plans, including self-insured ERISA plans, from discriminating against groups of providers, including optometrists, chiropractors, and other providers.

• Include vision care for children as an essential health benefit. Current vision care plans will be able to partner with major health plans for children’s eye care.

• Safeguard existing vision coverage provided through stand-alone vision care plans.

• Create state-based health insurance exchanges (marketplaces where consumers can shop for and purchase health insurance). State insurance laws will fully apply to each of the 50 state health insurance exchanges through which millions of Americans will purchase coverage when the bill takes effect.

• Create a 2.3% excise tax on medical devices sold by manufacturers and importers -- however, it specifically exempts retail-purchased medical devices, including eyeglasses, contact lenses and hearing aids.

• Establish a new tax on high-cost health plans (starting in 2018) -- however, it specifically excludes the cost of vision and dental coverage.

• Aim to close the Medicare Part D coverage gap, or “donut hole.” Starting this year, people who fall into the donut hole will get a $250 rebate. In 2011, they will get a 50% discount on brand name drugs. Under this plan, the donut hole is expected to close by 2020, and 75% percent of drug costs will be covered.

Further details of the bill need to be clarified as the legislation is implemented.

“Although this victory affords an opportunity to appreciate how optometry’s advocacy efforts have progressed, it doesn’t mark the end of the profession’s fight for its patients or to proactively define its own future,” says Jon Hymes, director of the American Optometric Association’s Washington Office.

CURRENT ISSUE


Labtalk May/June 2018