Health Care

Are Big Changes Coming to Employer-Sponsored Insurance?

Arguably the biggest outstanding question about the Affordable Care Act is what effect it will have on employer-sponsored insurance (ESI) coverage. According to the Bureau of Labor Statistics, 156 million Americans receive coverage through their employer or their spouse’s employer.

Many employers had to change the benefit structure of their plans to comply with the mandates contained in the ACA, but the larger question looming is whether employers continue to provide coverage at all in the coming years? The frightening thing about this question is no one really knows and there is a wide variance in the estimates out there:

  • One analysis done by the Urban Institute comes to the conclusion that the employer mandate is pretty meaningless and there would be little impact on the decision of employers to provide coverage or not. They estimate that roughly 200,000 fewer employers will provide coverage.
  • Another analysis done by S&P Capital IQ estimates that 90 percent of employers will decide to stop providing employees health coverage in the next six years. That translates to over 100 million Americans moving to the health insurance exchanges because their ESI has gone away.
  • Yet another estimate from Dr. Ezekiel Emanuel, one of the principal architects of the ACA, predicts that 80 percent of employers will suspend offering ESI in the next ten years. If he is right, it’s likely the smaller employers in the fully-insured market that would represent the 80 percent of employers deciding to stop offering coverage.


The two higher estimates are astounding numbers that signal an enormous disruption to millions of Americans in the coming years. As a country we have to determine whether such a dramatic transformation of how we all get health insurance coverage is acceptable – intended or not. Even if the estimates are off by half, we have a fog of uncertainty looming that employers and millions of their employees are going to navigate through in the coming years.

Ninety-seven percent of NAM members provide health coverage to their employees and most, if not all, I speak to want to continue providing that benefit. According to the BLS, manufacturers generally are more likely to offer coverage and their employees are more likely to accept health benefits compared to other sectors of our economy.

The ACA substantially changed the dynamics by increasing regulatory burdens and costs. If 90 percent of employers decide to stop offering coverage, it’s very reasonable to expect some of those employers will be manufacturers. It should be abundantly clear to everyone what forced them to make that decision.

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Setback for the ACA Started Years Ago

To my mind there is no rejoicing in the decision reached by a federal appeals court this morning. The decision determined that subsidies given to those enrolled in federally-facilitated exchanges (FFE) are unlawful because the Affordable Care Act (ACA) law clearly states the subsidies are for those in state-based exchanges. This decision is a severe blow to the Administration and supporters of the ACA as a majority of the exchanges up and running around the country are now ineligible for subsidies to offset the cost of coverage.

The reason there is little to rejoice about this decision is the origins of the decision began about five years ago, before the ACA was the law of the land. What it demonstrates to me is that the legislative process matters and is ignored at the executive’s peril. It also shows us that bad things are more likely to happen when one party decides to effectively cut the other out of the process. Remember, the House was forced to take up the poorly written Senate version of healthcare reform, because Senator Ted Kennedy was replaced by a Republican during a special election held due to his death in 2009, which reduced the Senate Democratic Majority to 59.

Further exacerbating the situation, the White House insisted today that the subsidies will continue to be distributed – in clear contradiction to a federal court decision. The Jacksonian reaction to effectively ignore the decision is only going to create more trouble and puts the millions of Americans who are caught in the middle of this fight in a position of accepting something the federal judiciary has deemed unlawful.

It’s long past time for the President and his administration to accept that the legislative process is integral to the functioning of our government and is not something to be ignored or tolerated. It’s also time for Congress to be legislators.

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Small Businesses Are Taking A HIT

In NAM’s quarterly surveys of members, health care costs consistently rank as the top business challenge for manufacturers. The concerns of these companies are well-founded given the avalanche of new rules, regulations and requirements as the rollout of the Affordable Care Act continues.

It’s particularly challenging for many small and medium-size business owners who, in addition to everything else, are feeling the hit of a new fee on health insurers, also known as the health insurance tax (HIT), which translates into higher insurance premium costs for small businesses and their employees. In a June 4th op-ed in The Boston Globe, “Small business picks up Obamacare tab,” Tom Stemberg, the co-founder and former CEO of Staples, spells out the devastating impact of this tax on businesses operating on tight margins and the workers they hire. His column echoes what the NAM is hearing every day from our members – and unfortunately, it seems that it will get more and more difficult for them as implementation proceeds.

Stemberg knows firsthand the challenges facing smaller businesses and what it takes to succeed and grow—and we agree with him wholeheartedly that it’s time to repeal the Health Insurance Tax.

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Health Care Law Still Creating Confusion

Earlier this week a representative from the IRS commented on the complexities associated with the Affordable Care Act (ACA). Specifically the reporting requirements employers will have to comply with next year. Supposedly, the requirements have already been “streamlined”, but even the administration admits they are still onerous and frustrating for employers and employees alike.

For example, although the actual fines for the employer mandate for small companies were delayed until 2016, employers are still being asked to report the information used to determine whether an employer faces penalties, causing significant confusion. In the Administration’s own words, “We still get questions as to why all this information is required.” If the “why” of reporting isn’t complicated enough, the “how” is certain to present even more problems.

A representative from the IRS, referencing the example of an employee who may have switched jobs within the same company moving from a self-insured to a fully insured plan, stated, “If you give me [a form] that says what their offer of coverage was from January to June and then another that July to December, the second one that comes in is going to bump the first and we are going to assume you didn’t offer them anything for the first six months.”

Although the administration is calling this “transition relief” it creates more confusion and uncertainty for employers, especially smaller businesses who do not have the capacity to manage this ever-changing landscape. Significant modifications need to be made to the law to make it manageable for manufacturers and we look forward to working with congress and the administration to make those changes.

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ACA University Offers a Deep Dive on What Manufacturers Are Facing

It’s no secret that manufacturers are at best uncertain about what the Affordable Care Act is going to do to their businesses. Countless delays in implementation, moving goalposts on requirements, and a continuing spike in health care costs have left manufacturers heads spinning.

In the latest segment of the webinar series titled, “ACA University,” the NAM and the Council for Affordable Health Care (CAHC) came together today to help offer a bit of clarity to what has been one of the haziest crystal balls in public policy history. They brought in experts from Ernst & Young to discuss the requirements of the ACA as well as the significant taxes and fees that come along with the health care law.

Over 150 people tuned in to hear NAM VP of Human Resources Policy Joe Trauger, NAM VP of Tax and Domestic Economic Policy Dorothy Coleman, CAHC President Joel White and Ernst & Young’s Anne Phelps and Sarah Egge offer their thoughts on what’s coming down the ACA pipeline.

They detailed the punitive, job killing taxes and fees that manufacturers are facing – including the medical device tax that has already cost 33,000 jobs and may end up eliminating 165,000 jobs from our economy. Additionally, manufacturers are looking at $3.3 billion in costs from the reinsurance fees – which punishes companies that provide their own insurance without any benefit under the program.

Manufacturers are leading business in providing health benefits to their employees, but the ACA is making it harder and harder to do so. In the end, there were are a great many answers provided by today’s webinar, but it’s clear that many more questions remain.

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Administration Backs Down on Harmful Proposal

On Monday, the Administration walked back almost all of a proposed regulation that would have significantly damaged the Medicare Part D Program. The NAM had filed comments three days before asking for withdrawal of the proposed rule. The Administration, responding to significant criticism about the proposal stated, “Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time.”  This is a positive step forward in the ongoing effort to preserve the Part D program – one of the rare government programs that is popular and runs significantly under budget.

This is, however, a short-term victory. The Administration also noted that they may revisit the proposal in the future. The NAM will remain vigilant against the changes outlined in the January 10 Proposed Rule. Many of the issues presented were a clear violation of legislative intent and would have increased costs to manufacturers through cost-shifting and program expansion.

A link to the NAM comment can be found here.

 

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Changes to Medicare Parts C and D will Increase Costs for Manufacturers.

The NAM filed comments today with the Centers for Medicare and Medicaid Services (CMS) on “Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs,” asking for withdrawal of the proposed rule while highlighting serious changes that would alter the programs and ultimately increase costs. Of specific interest is an interpretation of the law that opens the door for government intervention into negotiations of plans – a clear overreach of the legislation that was intended to prevent government interference in these private sector negotiations.

In addition, the rule places mandates on mail order companies, reduces the number of protected classes of drugs provided under Part D, and reduces the ability of plans to negotiate with preferred pharmacies. All of these significant policy changes will increase the costs to Medicare, and in turn, increase the cost to manufacturers who use these programs. These changes are contrary to legislative intent and undermine the stability of successful programs. Instead of tearing down a popular program that is fiscally sound we should be looking to replicate similar solutions elsewhere.

Medicare policy should be based on sound health outcomes combined with robust fiscal management. The current debate looks too much at old politics and not enough a new answers.

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Cuts to Medicare Advantage a Bad Idea for Manufacturers

Today, the NAM expressed our strong concerns to the Centers for Medicare and Medicaid Services (CMS) about their recent announcement of changes to the reimbursement rates for health plans under the Medicare Advantage (MA) program.  Many employers sponsor MA plans as a way to ease the transition from active employment to retirement, and disruptions to the program will jeopardize access to this option. The MA program has absorbed significant cuts to reimbursement rates over the last two years, and CMS’ announcement of further reductions is compounding damage already inflicted on the program.

If implemented as proposed, MA rates will have declined by nearly 11 percent in the last two years. Over 2.5 million retirees count on MA plans sponsored by their employer or union. The majority of the cuts will be passed on to beneficiaries in the form of higher premiums, lower benefits and fewer healthcare options. Estimates indicate premiums could rise by an average of $420 to $900 on top of added cost sharing of $1,750. Millions of seniors and disabled could be priced out of plans they have come to know and depend on.

The final rate letter is due on April 7 and it is our hope that CMS will reconsider and withdraw the proposed cuts and keep the levels flat for the coming year. We need to stop undermining successful programs and begin considering how this will affect manufacturers and beneficiaries.

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Medicare Advantage Is Important to Manufacturers

Medicare Advantage, Medicare+Choice, or Medicare Part C, has been in existence since 1986 and many employers have adopted the program as a seamless transition for their retirees to move from the coverage they are used to receiving from their employer-sponsored plan to their coverage under Medicare. Unfortunately, Medicare Advantage has also been used as a political scratching post over the last 20 years and was not spared from the claws of the Affordable Care Act.

Medicare Advantage plans sustained a reduction of 6.7 percent for 2014 and a recent ruling from the Centers for Medicare and Medicaid Services announced another reduction of more than 4 percent planned for 2015. These types of reductions will inevitably lead to fewer choices for seniors and retirees, because plans will leave the program. It also forces reductions in benefits, limited provider networks and increases in out-of-pocket costs.

The NAM has weighed in with CMS on these reductions and will continue to work with our partners in the business community to convince the Secretary of Health and Human Services and the Administrator of the Medicare program to reconsider their position on further reducing reimbursement rates for a program many employers participate in to ease the transition from the working years to retirement.

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NAM Member Company Named Country’s Healthiest Workplace

Odds are you have seen or benefited from Draper, Inc’s products at some point. What you might not know about one of the world’s largest producers of projector screens is they are also industry leaders in efforts to provide employees with a healthy workplace.

This week, Healthiest Employees, LLC released their list of the top 100 healthiest workplaces, with Draper, Inc. topping the list.

​The Healthiest Workplace Award program is operated throughout the United States,  and six areas of “workplace wellness” were considered by a group of independent judges: culture and leadership; foundational components; strategic planning; communication and marketing; programming and interventions; and reporting and analysis.

The NAM congratulates Draper, Inc. on this honor and on their leadership in employee wellness. To read more about Draper, Inc and their efforts to improve employee health and community well-being, visit: www.draperinc.com/Green/Citizenship_Draper.asp.

 

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