If Plug Is Pulled On ACA, Everyone’s Plan Could Change
Amid all the talk of scrapping Obamacare, people who get their insurance from their employers might be thinking: It doesn't matter to me.
It does.
As part of the Affordable Care Act, aka Obamacare, employer-provided plans had to change too. They had to start offering free annual checkups with a primary-care physician. They had to cover prescriptions and mental health care. And young people could remain on their parents' plans until they turned 26.
If Obamacare is scrapped, those changes to employer-based plans could be scrapped too. It all will depend on political machinations in Washington: President Donald Trump has said he wants to repeal Obamacare on the double, but he and some Republicans have said they also want to keep some of the most popular parts.
For now, nearly all forms of health insurance - not just the plans bought at federal or state marketplaces, but also the kind you get from your employer - have question marks hanging over them.
More than 150 million Americans get their health insurance through their employers, dwarfing the 20 million who get their insurance on the federal or state Obamacare exchanges or through a Medicaid expansion that Obamacare also ushered through.
Steve Grandfield, chief operating officer for Blue Cross Blue Shield of Nebraska, said it's logical that debate about the Affordable Care Act, or ACA, has revolved especially around the marketplaces. Yet 90 percent of Nebraska Blue Cross' 746,000 customers belong to employer-sponsored group plans, and alterations to the federal health care law will apply to them too, Grandfield said.
"We know that there is going to be an action," he said. "We expect it to be significant, but what that exactly means, there's not been a lot of detailed information shared with us."
Grandfield and other experts on health insurance said employers are watching to see what President Trump and Congress do beyond the few preliminary steps they already took. So far there's no Republican consensus on an alternative plan.
That uncertainty, even after Republican leaders discussed the ACA at a conference last month, leaves employers with few details to give employees.
Some, including Greater Omaha packing company, are reassuring employees that there won't be many changes to their plans. Even a total repeal of the ACA wouldn't have much impact on the meat-processing company's 1,150 employees, said Mark Theisen, general counsel.
"We self-insure the health benefits we offer our employees and their families and would not consider dropping the health care benefits," Theisen said. Those benefits go beyond the minimum required by the ACA, he said, and include a wellness program and a free clinic for employees and their families.
Kim Hillyer, spokeswoman for Omaha-based online stock brokerage TD Ameritrade, said health benefits will remain an important part of having a compensation package that is competitive locally and nationally, no matter what happens with the ACA.
"Looking ahead, we think it's still too early to speculate on what might change," Hillyer said. "We're proceeding as we normally would, and if something new is announced that might impact us, we'll evaluate and adapt as we normally do."
The potential changes ahead are clear. Depending on your point of view, some changes may seem positive, others may seem negative.
'Essential' benefits
The ACA requires individual and group health plans to include 10 "essential" benefits, including coverage for inpatient, outpatient and emergency room care, prescription drugs, mental health and substance-abuse treatment and maternity care. Some of those weren't included in previous employer group plans.
The essential coverage helps people who need that care, but the wide range of services is one reason costs under the ACA have increased.
If the next law doesn't require some of those benefits, insurance companies may devise a wider range of health plans, including some with lesser benefits and, presumably, lower monthly premiums.
Chuck Olson, CEO of OCI Insurance and Financial Services of Omaha, said some of the Obamacare-mandated benefits likely won't change, even if the law is scrapped. For one, he said, the rule that allows dependents to stay on their parents' policies until they are 26.
"It's hard to take back benefits that people like," he said.
But freed from the ACA's regulations, insurance companies will "develop plans that the people really want," he said. Some of the "bells and whistles" that are mandated today, such as maternity care for everyone, might go by the wayside, he said.
But each state has a government agency with authority over health plans, Olson said, and they can reject plans with high costs and few benefits.
A mandate
The ACA's "individual mandate" requires people to buy insurance or pay a tax penalty. Dropping the penalty would mean less incentive for young, healthy people to buy insurance if they don't already get it from employers. That would leave insurance groups with relatively older people who often have expensive health needs - a recipe for higher premiums for the entire group.
The impact of that change might be blunted for employer groups, however, because companies usually pay at least a portion of the cost of insurance. But the change could raise costs for employers too.
And if the next law doesn't penalize employers who don't offer workers affordable insurance, that could reduce employer costs. But some of them may drop group benefits altogether. Under Obamacare, employers with more than 50 workers generally have to offer some form of employer-paid health insurance.
Pre-existing conditions
The ACA's requirement that anyone, even those with serious medical problems, can buy insurance is one of the law's popular features. Employer groups allow people with pre-existing conditions to enroll, but before the ACA they sometimes faced waiting periods up to a year. Without the ACA's rules, waiting periods could return.
So what's next?
As for now, the U.S. Department of Health and Human Services, which administers the Affordable Care Act, referred questions about possible changes to the White House. The press office there didn't respond to questions from The World-Herald. President Trump also didn't respond to a Twitter message seeking information for this story.
But in the meantime, all these potential changes have the experts trying to figure out what will happen and, in some cases, trying to influence those changes.
"The path forward ... is not to dismantle the protections we have, weaken the standards to such a degree that what people are buying really isn't health insurance at all," said Lydia Mitts, senior policy analyst for Families USA, a Washington, D.C., consumer group that favors the Affordable Care Act. "That's not real coverage."
Yet Olson, the Omaha insurance consultant, said the ACA is a failed model for health plans. He said careful changes can bring down costs and improve the health care payment system, including employer group plans.
John Schembari, an attorney at the Kutak Rock law firm who consults with Omaha companies on workplace matters, said it will be tough to cut costs while keeping good insurance.
If popular features of the law remain in effect, he said, "the billion-dollar question will be how to pay for these benefits if there is no longer an employer mandate or individual penalty."
No matter what happens, he said, employers will continue to use group health plans to recruit and retain employees. "The ACA did not change that, and I don't expect the ACA's replacement to change that."
Since the election, employers have been asking companies like BP Benefit Professionals of La Vista what will happen, said Lisa M. Daniels, BP's vice president. Insurance companies "are not giving any advice until there are actual changes in the law, until they see an executive order."
Right now, she said, employers want to know whether to file their annual reports to prove compliance with the Obamacare directive to offer employees health insurance. The time-consuming reports, due at the end of February, are intended to prove they have offered qualified health plans to eligible employees.
A late or missing report carries a tax penalty of $100 per day per employee. Some think the Trump administration may drop the unpopular requirement, an action that may not require congressional approval.
"Everyone wants to know 'Can we not do this report?' " Daniels said. "We're telling them you have to abide by the law as the law stands."
Health plans for 2017 are likely to stay in effect for the full year because they involve contracts between doctors and insurance companies, insurance companies and employers, employers and employees. Most group plans follow the calendar year.
But executive or congressional actions this year could have an impact.
If the Trump administration drops the tax penalty for not having insurance, some people would simply stop paying monthly premiums. Because healthy people are more likely to drop their insurance than sick people, the result could be bigger losses for insurance companies or for employers that are self-insured.
Changes starting in 2018 would have even bigger impacts on group plans.
The ACA prohibits plans that limit a person's total claims during a year or for a lifetime. If that ends, said Mitts, the Families USA analyst, "this could be really devastating for families with a kid with a congenital heart defect."
"It would be very easy for them to max out their coverage within a year or their lifetime over a very short amount of time," she said. "It's meant to protect families, if they do face high medical expenses, from going into severe medical debt."
The law also requires insurance companies to pay taxes on premiums they collect, with the money going to offset subsidies that reduce premiums paid by lower-income people with ACA policies.
Over three years, Blue Cross of Nebraska paid $120 million to the government for that tax, which is understandably unpopular with employers and insurance companies.
Grandfield, the Blue Cross executive, said the Omaha-based health insurer, Nebraska's largest, usually has its plans for the coming year ready by April 1 so it can move smoothly through the state and federal approval deadlines this summer and fall.
"We don't know much more today than we did in November, when the election results came in," he said. "What we hope for is that the results of whatever the administration does, from repeal and replace, it puts us in a position that Nebraskans have more choice and options than what they've had."
Dan Thrasher, president of Omaha's Thrasher Inc., a basement and foundations company, said the health plans for his 330 employees added some ACA-mandated features when the law took effect. But costs also have increased and the biggest burden, he said, came with "cumbersome" paperwork to comply with the law.
"Most of us would say we'd like less regulation. But how will this deregulation roll out?" he said. "How are they planning on doing it, and how are they going to do it in a way that's going to give us relief from the regulations but keep our insurance companies viable?"
If Obamacare is scrapped but insurers still aren't allowed to turn away people for pre-existing conditions, for instance, how will they survive without raising rates for everyone, Thrasher said.
"I'm a fan of deregulation, but I don't think it's something that should be done in a snap judgment or forced through. It should be done in a well-thought-out manner."
Still, Thrasher said he's concerned about how the law will be changed. His insurance company says to sit and wait because nobody knows what's going to happen.
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