Oh, the Details … (Jeff Hankins Publisher’s Note)

Following news accounts about health care reform was one thing, but getting into the details and implications for business owners and executives is another story.

The Arkansas Business Health Care Reform Symposium was an eye-opener. Most of us felt we had been punched in the gut as we absorbed the changes coming our way.

Yes, health care reform is going to give millions affordable insurance, benefits and security while helping hospitals recover previously unreimbursed costs. That’s the feel-good message President Obama and his supporters want us to remember.

But lost in the message are details about how reform will be executed by the health care industry and employers. Businesses have historically played a central role as middlemen between individuals and the system by securing private insurance plans and collecting the premiums.

Fundamentally, our reform options are simple: Either employers will continue to offer a private insurance plan with lots of new requirements and at a higher price, or they will pay the federal government to get out of the insurance business altogether and direct their employees to what will be a “state exchange” insurance plan.

Considering the new requirements for paperwork, income testing and required benefits that will lead to more expensive premiums, I think most businesses will be hard-pressed to justify continuing to offer health insurance benefits. While private insurance companies will be providing the state exchange options at the outset, you can’t help but wonder if this wasn’t a backdoor way of moving this country to a full-fledged public health care system.

A big question is whether private insurance companies will see enough benefit to make ongoing relationships with businesses worthwhile. Will businesses see more competitive premiums and will employees enjoy better access to providers than those who choose the state exchange option?

The biggest incentive for insurance companies to maintain company plans might be that payment is guaranteed monthly through payroll deductions. However, the Massachusetts state exchange model empowers the income tax department to enforce participation and payment, so that could be just as appealing. This is likely how either the federal or state governments will try to keep people from dropping in and out of the system on a whim.

The role of health insurance brokers will change. Those commissions they receive will be counted toward an administrative cost percentage limit and there’s no way insurance companies will continue to give up that margin. A couple of speakers suggested brokers will have to move toward a consultation fee model. Based on what we were hearing, we’re going to need that independent consulting and interpretation.

One of the more outrageous provisions of the health care reform regards IRS Form 1099-Misc. Beginning with any payments made after Dec. 31, 2011, we will have to file 1099s for any vendor that we pay $600 or more during the year. That could be a vendor, an airline, a hotel or a restaurant. Apparently, that little provision might be the first to be repealed because of bipartisan concerns in Congress.

The health care industry is still awaiting federal rules that will detail sections of the law such as “essential benefits” and “minimum essential coverage” that insurers must include in plans. This also means it’s difficult to predict the impact on premiums.

Access to the health care system was another major topic. Arkansas is already experiencing shortages of primary care physicians and specialists, particularly in rural areas, so patients may find themselves waiting longer to receive care. Meantime, growing overhead costs and reduced payments for services are driving more physicians out of private practices and into hospitals or large physician groups.

It’s no wonder Obama and Congress didn’t want full implementation of reform until 2014. Neither businesses nor patients realize the level of systemic change that’s going to take place, and it’s not likely to be as rosy as the feel-good message that got it passed.

(Jeff Hankins can be reached via e-mail at [email protected], followed on Twitter @JeffHankins and connected with at Facebook.com/Jeff.Hankins and Linkedin.com/in/JeffHankins.)