Health Reform Insights
Personal candid observations from SPBA's Active Past President Fred Hunt
This e-mail is to help you cut through the dense fog of rhetoric & posturing of the various sides & pundits describing the current situation and what it means. The truth is that it is not what any of them are saying. The end of the e-mail is good news & opportunities.
The Florida court decision by Judge Vinson is important and your grandchildren will be studying it in law school. I described the legal ramifications & limitations in the February 1 e-mail. So far, the score is 2 & 2 for & against PPACA, and there are 20 more lawsuits pending. Even at the SCOTUS level, it will be close, but a toss-up, and they may only rule on part of PPACA. Lawyers tend to think that outcomes are determined by decisions that are made in court rooms, but this is a good example of the true outcome being steered by other factors…such as the lure of easy money & politics.
The 26 states that brought the case (and the other 24 could say “me too”) could rationalize that the FL decision means that they can just stop their PPACA implementation planning and wait for the long slow judicial process until SCOTUS rules that they can just forget PPACA as a bad dream. Some spoke boldly that way the first day. HOWEVER…if they don’t surge ahead with implementation, they won’t get any of the millions of dollars HHS is giving away as Early Innovator Grants. If state officials don’t go for the HHS millions, then at the next election those state officials will be clobbered with opposition ads showing how they turned away millions of easy dollars, and consequently, the state taxpayers end up burdened with the implementation cost. I know, I know…both federal & state tax dollars come from the same citizen pockets, but this would make a devastating political ad. So, expect states to waffle and try to play both sides of this.
Similarly, a bill has been introduced in the Senate to let states opt out of the individual mandate, employer mandate & Medicaid expansion. The goal of such legislation is that IF it passed (it’s only at the first pitch of the first inning right now), and IF over half of states opted out, it would be seen as a referendum to undercut PPACA. However a Senate vote to kill the 1099 part of PPACA did pass (but that’s only the first inning of the game).
Meanwhile, the Senate vote to mirror the House vote to totally repeal PPACA failed along party lines. The message of this is that the original hopes of repealers to combine the increased number of Republicans in Congress + the Democrats who voted against PPACA originally + any new chastened Democrats is not happening. This seems to block the prospect of total repeal in Congress.
WHAT DOES THIS MEAN FOR YOU?? Unfortunately, both sides in Washington DC feel that time is on their side, so they are in no hurry…just enough to keep them in the headlines and keep the political donations flowing. Politicians are on election-cycle time, whereas you have the responsibility to help new & current clients make wise decisions for next month and next plan year. So, all this maneuvering and pontificating rhetoric just magnifies the unknowns for those of us in the real world. Meanwhile, time is NOT on our side, because Congress will lose interest or suddenly get diverted to some new headline-maker (Middle-East, oil, whatever). Then PPACA goes to the back burner. The shift can happen literally overnight.
WARNING: Do NOT assume that total PPACA and the requirements are going to disappear. Polling by repealers has shown that “insurance regulation” (coverage to 26, pre-ex, MLR, etc. which are the most troublesome to employee benefit plans) have broad popularity even among PPACA haters. So, my forecast is that a compromise win-win will end up. Parts of PPACA that are the most irrelevant to our work (such as 1099) will be repealed or disappear, but the parts that put us through the hoops will remain. This allows both repealers and defenders to claim victory. They can then give speeches telling their voters & political action committees how they made the good fight and “won”.
So, you and clients need to absolutely keep up the learning curve and preparation for PPACA. This is not going away. Even if the law were to disappear tomorrow, the regulatory agencies have tremendous power to impose things administratively. For example, the Patient Bill of Rights was defeated in Congress….but DOL then imposed the major requirement on ERISA plans (claims regs) as an administrative rule. So, you need to stay on the cutting edge. Sorry.
WHAT ABOUT DE-FUNDING? The Obama Administration is burying the operations & budgets within larger general government agencies, which will make it harder to make pinpoint defunding. However, more promising is that the House Energy & Commerce Committee (a major overseer of this and our issues) is holding hearings to ask HHS where/how it is spending $400 million in stimulus dollars on Creative Effectiveness Research (CER…which would end up with the most “death panel” impact) and the money on PPACA implementation. The thought is that if Americans saw how much money is flowing, there will be a public opinion (and subsequent political) uproar. Also, as I have said before, defunding does not stop the legal requirement, so it can suddenly be dropped on you at any time.
GOOD NEWS FOR YOUR BUSINESS:
Amid all the gloom & discouragement in this e-mail, let me end with some good news. A trend SPBA predicted is coming true. Many feared that employers and/or plan participants would dump their sponsored plans and go to some easy cheap state exchange or something. We noted that new government plans would not be easy, cheap, or as useful/prompt, and certainly not as customized as employer plans. We said employers & workers would value the advantages of their employer plans.
The National Business Group on Health did a survey of 1,538 large employers and discovered that 75% of employees use the employer (plan, wellness plans, etc.) as their resource for medical & health information. That is a jump from 54% in 2007. That time period is when TPAs & employers expanded their wellness and other medical-assistance services. 70% of the employees rated the information via the employer as completely, very or moderately trustworthy. What about docs? Only 61% of the employees consider their doctor as a resource, which is a drop from 72% in 2007.
It is good that findings about how much employees value employee health plans is coming from employer groups. If any were thinking of dumping their health plans they will see that they need to think twice if they want the recruitment & retention advantages.
What about small employers? There is less formal, but equally important signs that small employers are turning to brokers and TPAs to provide the guidance & services through PPACA. They want people who understand the twists & turns of the political & legal upheaval as well as the professional skills to do what needs to be done.
TPAs & brokers are going to have a new group of employers knocking on the door, and it will take some coordination between TPAs & Stop-Loss. For an assortment of reasons, very small employers are or plan to leave the fully-insured market and would like to go to self-funding. In self-funding, size does matter. When I first came to SPBA in 1980, 500 employees were considered the absolute minimum to safely self-fund. It quickly dropped to 250, 200, and seems to average 75-100 now. So, you need to be thinking what you might be able to do for employers in the quite-small size range if they knock on your door or you want an expanded market. Stop-Loss will be the key, and the SPBA Board is being pro-active with SPBA’s Stop-Loss Service Partners to seek solutions and find ways to avoid vocabulary and problems that too often pop up. Stay tuned.
So, the take-away news is that large employers (which set the example for smalls, media & politicians) are clearly seeing the value in having employer-sponsored plans, and small employers want into self-funding. So, your homework is to stay on top of implementation developments, keep your eyes open for new markets & services to keep plan participants happy, and get involved in your state PPACA implementation functions to avoid them making dumb decisions. Your future can be bright.
Fred
The Society of Professional Benefit Administrators (SPBA)
SPBA is the national association of Third Party Administration (TPA) firms that provide comprehensive administrative services to client employee benefit plans. It’s estimated that 55% of US workers, from every size and format of employment, are covered by employee benefit plans managed by TPA firms. SPBA also has a Stop-Loss Service Partner category for carriers, MGUs, and re-insurers of self-funded health plans.
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