The post-election health care landscape

Industry experts suggest businesses prepare now for incoming requirements

Doctor and patient

With President Barack Obama re-elected to another four years in offices, businesses that had been waiting to see if health care reform would be upheld now have an answer.

The Patient Protection and Affordable Care Act – nicknamed “ObamaCare” – is coming. “Employers with 50 or more people working in the business need to get ready for this immediately,” said Jon Schroeder, owner of the Schroeder Benefits Group in Battle Ground. These companies have barely over a year to comply with requirements that go into effect on Jan. 1, 2014. Smaller businesses are exempt from these requirements.

The rules

Businesses will see some changes go into effect beginning in 2013. Employers must start withholding an extra 0.9 percent from the pay of workers who make more than $200,000 this coming Jan. 1, to fund future operations of Medicare. The tax affects married couples with a combined household income of $250,000. Companies that self-insure – usually the largest employers – will also be required to start paying fees to fund medical research beginning in the new year.

But the bigger impact comes on Jan. 1, 2014, when employers with 50 or more people on staff will be charged between $2,000 and $3,000 per employee if they don’t provide health insurance.

Schroeder said that he has talked to executives who plan to slow their pace of growth to avoid reaching 50 employees. Some smaller companies, meanwhile, have considered dropping their health insurance plans and instead helping workers to buy plans in the marketplace.

“I’ve been hearing a lot of ‘What does this really mean for us? What does this mean for our business?’” he said. “The answers are complex. It’s going to depend on the number of employees you have, it’s going to depend on the industry.”

For that reason, he advises Southwest Washington business leaders to start planning for 2014 now.

The impact

Employers should also expect insurance rates to continue to climb, said Jerry Nies, owner of Nies Insurance, which has offices in Camas, Vancouver and Battle Ground.

“The cost of insurance continues to go up – always,” Nies said. “What’s changing is how much the employer pays. More are opting for high deductible programs or setting up private accounts for individual employees.”

The Affordable Care Act requires insurers to issue policies to everyone, regardless of pre-existing conditions. Denying applications of the already-sick had been used to keep rates down. Nies said he attributes Lifewise health insurance’s 22 percent increase in the cost of individual health policies in part to this requirement.

“It’s already expensive, and now it’s even more expensive because of the mandate that’s coming down that you have to accept everybody regardless of pre-existing condition,” he said.

Nies and Schroeder both stated that the short-term impact of the law will inevitably drive up insurance costs, and that it’s hard to know for sure just how enrolling more people in health plans will affect long-term costs.

“To the extent that this really does happen successfully, it could drive down expenses for all of us,” Nies said. “Long-term, if it works, it’s probably a very good thing. In the meantime, for two or three or four years, it’s going to be very difficult for a lot of us.”

Schroeder said he’s skeptical of claims that insurance rates will ultimately go down.

Nies and Schroeder believe that selling health insurance will become less profitable for their businesses.

“We’re going to be selling less insurance in the coming years…” Nies said. “More will be bought on an individual basis from the state exchange program in Washington. We’ll see more businesses buying insurance on a net basis instead of a commission basis.”

Schroeder said that with profits shrinking on insurance policies, he is working to boost his business volume – in part by offering more guidance to companies seeking to understand coming changes to the law.

Hospitals, doctors adapt

Businesses and nonprofits that provide health care have a raft of additional rules and pressures that they face.

“The biggest thing we’re focusing on now is improving quality, improving access and reducing costs” at Legacy Salmon Creek and other hospitals in the Legacy Health system, said spokesman Brian Terrett. “The goal will be to keep people out of hospitals in the future. It’s designed to decrease the rate of growth and eventually reduce costs.”

PeaceHealth Southwest Washington medical Center is engaged in similar efforts. Ken Cole, spokesman there, said Southwest has cut expenses by more than $80 million, and is working to get more patient need coordinated by primary care providers rather than specialists.

“It’s been a challenge to operate more efficiently, maintain our standards of care and to reduce costs,” he said. “But it’s what we need to do.”

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